Almost 2,000 people who issued over £600 million in gifts have been labelled as ineligible for relief against the controversial 40% levy in the past five years, Telegraph Money has revealed.

Gifts of property and other assets can be made tax-free if the gift giver lives for at least seven years. This is known as the “seven-year rule”. However, HMRC will still levy a tax charge if it discovers that the person who made the gift continued to live in the property or in any way continued to benefit from the assets given away.

If this occurs, the gift will be deemed a “gift with reservation of benefit”, no tax break will apply and the gift will be counted as part of the estate on death.

A total of 1,830 gifts worth £624m have been caught since 2016, according to a Freedom of Information Act request submitted by Telegraph Money.

It has been reported that the true figures are likely to be much higher, as death duty returns can take months or even years to be settled, meaning the statistics must be updated and confirmed in future years.

Almost three-quarters of these gifts related to property and nearly 13% related to cash transactions, while gifts of shares and other securities made up a further 8%. The remainder were classed as “other assets”.

For a gifted property to be deemed exempt from IHT it must be an outright gift. If the person who makes the gift wants to carry on living in the property, they must pay rent, which must be at market rates and not a token subsidised amount.