To keep their money in the family – rather than the Treasury’s coffers via Inheritance Tax (IHT) – 10 million households are planning to leave a lifetime gift or an annual gift to friends and relatives.

With more people caught than ever before by the £285,000 IHT threshold because of the rising value of their houses, and increasing affluence generally, Scottish Widows has discovered a £103bn giveaway enabling people to avoid tax on their UK investment.

The insurer has found that 41% of households – up from 34% last year – are liable for a 40% IHT bill. Of these 10 million establishments, 43% have taken steps to mitigate the liability, with 44% or 1.2 million people planning on giving away either a lifetime gift or an annual gift to friends and relatives.

Almost half (47%) would like their gift to be used to help relatives get on the property ladder, with 20% hoping the money will enable their beneficiaries to enjoy their own retirements, and 22% to save it for their own children.

Anne Young at Scottish Widows said: “IHT is a tax affecting half of the country yet it was originally designed as a tax on the wealthy and not people who have patiently built a substantial saving and investment during their lives.

“It is really important that people prepare for the possibility of leaving a huge tax bill on their death. Gifting is becoming an increasingly recognised way to avoid IHT, but remember that few gifts are totally exempt, so you should check the options with a financial adviser.”