The government has claimed that the budget measures will affect only a “tiny fraction of the wealthiest top 1% of the population”.

However, the Association of British Insurers (ABI) has written to the government to protest that “millions” of people could be caught out. At an urgent meeting with Revenue & Customs this week it will push for life-insurance policies to be exempt from the rules.

Brown has also claimed that the measures will raise just £15m a year, but a leading tax barrister, James Kessler, said last week that the Treasury could raise hundreds of millions of pounds.

Kessler said: “This might be the most blatant tax grab since the chancellor removed the dividend tax credit from pension funds in 1997, but with even more profound social implications.”

Millions of people take out life policies to clear their mortgages, provide their families with an income or pay IHT when they die. These policies are routinely written in trust so that the payouts themselves are not subject to IHT.

Following the budget, however, these trusts could now be slapped with a tax charge of up to 6% on the value of payouts that come above the IHT threshold — £285,000 from this Thursday.

Emma Chamberlain, a barrister and member of the Society of Trust and Estate Practitioners, said: “This measure will hit ordinary, middle England.

People who take out life policies to pay a tax bill are not the very wealthy that the government wants to target.”

More than 1m people may also have to review their wills because Brown’s move snares trusts that are commonly set up on death. Spouses — usually widows — could be forced to pay IHT on their husband’s estate when assets pass into the trust on his death. At present, this would be free from IHT.

The chancellor’s clampdown essentially affected two types of trust — accumulation-and- maintenance trusts and interest-in-possession trusts — that are used to pass wealth to children or grandchildren free from IHT, while still retaining some control over the money.

Brown used his budget to sneak in a triple stealth tax on them: a swingeing IHT charge of 20% when they make a gift into one of these trusts, as well as a 6% penalty every 10 years and an exit charge.

It has emerged that, as the rules stand, life policies that are written into trust could also fall foul of the new rules.

Explore Money

• Property & Mortgages

• Savings

• Borrowing

• Investment

• Funds

• Insurance

• Consumer Affairs

• Tax

• Pensions

• Broadband