Over 800,000 Aviva policyholders will receive a cash windfall just in time for Christmas, Britain’s biggest insurer announced on Thursday.

The tax-free cash payments of between £214 and £1,230 result from the carving up of Aviva’s £1.25bn inherited estate, part of a “with profits” fund that has been built up over many years.

Eligible policyholders were offered the cash payments in return for giving up their right to future special distributions from the inherited estate.

Just over 87 per cent of eligible policyholders voted, and of those only 4 per cent declined the offer.

Thanks to the upturn in global equity markets, Aviva said the final payments would be “slightly higher” than the indicative offer included in voting packs, though the payments are still lower than suggested in 2008, when Aviva said policyholders would receive an average £1,000 each. This had to be cut amid sharp falls in stock markets.

Payments will be sent out from early November, with most arriving by the end of the year. Ten per cent of recipients will receive over £1,230, in line with the size of their investments.

Mark Hodges, chief executive of Aviva UK Life, said: “Our objective has always been to create a reattribution that was fair to both shareholders and policyholders, and that’s exactly what we’ve achieved.”