Deed of Variation Guide UK 2026 — Redirect an Inheritance to Save Tax

A deed of variation lets you redirect an inheritance after someone dies — and it’s treated as if the deceased made that gift themselves. This can save significant inheritance tax.

What Is a Deed of Variation?

Key Points

How It Works

1. Someone dies, leaving assets via will or intestacy
2. Beneficiary receives inheritance (or entitlement to it)
3. Within 2 years, beneficiary signs deed redirecting assets
4. For IHT/CGT, treated as if deceased left it to new recipient
5. Not treated as a gift from the beneficiary

When to Use a Deed of Variation

Tax Planning Uses

Common Situations

Example 1: Spouse died, leaving everything to adult children

The deceased’s nil-rate band and RNRB may be wasted if children inherit directly. A deed of variation can redirect some assets to the surviving spouse, preserving allowances for the second death.

Example 2: Wealthy beneficiary

If you inherit £200,000 but already have a large estate, that money will be taxed again when you die. Redirecting to your children now (treated as deceased’s gift) avoids this.

Example 3: Charitable intentions

If the deceased would have given to charity but didn’t specify, redirecting 10%+ can reduce the estate’s IHT rate from 40% to 36%.

Tax Benefits Explained

Using Unused Nil-Rate Band

Skipping a Generation

Charitable Giving

Legal Requirements

Essential Elements

Statutory Wording

For IHT purposes, include a statement like:

“The parties intend that this variation shall be treated for Inheritance Tax purposes as though the dispositions effected by it had been effected by the Will of [Deceased’s Name] pursuant to section 142 of the Inheritance Tax Act 1984.”

For CGT purposes, add:

“The parties elect, pursuant to section 62(6) of the Taxation of Chargeable Gains Act 1992, that this variation shall not be treated as a disposal by [Beneficiary’s Name].”

Who Must Sign

What Can Be Varied?

Yes — Can Be Varied

No — Cannot Be Varied

Step-by-Step Process

1. Assess the Opportunity

• Review the will and estate value
• Calculate IHT as currently structured
• Identify potential savings from variation
• Confirm you’re within 2-year window

2. Get Agreement

• All affected beneficiaries must agree
• Cannot vary if any beneficiary objects
• Consider family dynamics carefully
• Explain tax benefits to persuade

3. Draft the Deed

DIY approach:

• Use template deed
• Ensure statutory wording included
• Specify exactly what’s being redirected
• State who the new beneficiaries are

Professional approach:

• Solicitor drafts deed (£300-£1,000)
• Ensures correct wording
• Advises on tax implications
• Handles registration if property involved

4. Execute the Deed

• All parties sign
• Witnesses sign
• Date the document
• Keep multiple copies

5. Register/Report

• Land Registry if property involved
• HMRC with IHT return if applicable
• Inform executors/trustees

Example Deed of Variation

DEED OF VARIATION

Date: [Date]

Parties:
1. [Beneficiary Name] of [Address] ("the Original Beneficiary")
2. [New Beneficiary Name] of [Address] ("the New Beneficiary")

Background:
A. [Deceased Name] ("the Deceased") died on [Date of Death]
B. Under the Will dated [Date]/intestacy rules, the Original Beneficiary 
   is entitled to [description of inheritance]
C. The Original Beneficiary wishes to redirect [part/all] of that 
   entitlement to the New Beneficiary

Operative Provisions:

1. The Original Beneficiary directs that instead of receiving [specific 
   assets/amount], such [assets/amounts] shall pass to the New Beneficiary 
   absolutely.

2. This Deed is intended to take effect under section 142 of the 
   Inheritance Tax Act 1984 and section 62(6) of the Taxation of 
   Chargeable Gains Act 1992.

3. This Deed shall be read back into the Will/intestacy as though the 
   Deceased had directed these dispositions.

Signed as a deed by [Original Beneficiary]:

_______________________
Signature

In the presence of:

_______________________
Witness name
_______________________
Witness address
_______________________
Witness signature

[Repeat for all parties]

Costs

DIY vs Professional

When to Use a Solicitor

Common Mistakes

Important Limitations

Cannot Receive Anything in Return

If the original beneficiary receives anything of value in exchange for the variation, it’s treated as their own gift, not a variation of the will. This means:

• The beneficiary makes a potentially exempt transfer
• 7-year survival rule applies
• Tax benefits of variation lost

Minors as Original Beneficiaries

If a minor is giving up entitlement:

• Court approval usually required
• Must be in child’s best interests
• More complex process

Mental Capacity

All parties signing must have mental capacity to understand what they’re doing. If in doubt, get medical assessment.

Interaction with Other Planning

Existing Trusts in Will

If deceased’s will creates a trust:

• Beneficiaries can vary their interest
• Trust terms themselves may limit this
• Check trust deed carefully

Multiple Deaths

If someone dies shortly after the first death:

• Their executors can sign variation on their behalf
• But only within 2 years of original death
• Timing critical

Intestacy

Deeds of variation work for intestacy too:

• Same 2-year deadline
• Statutory beneficiaries can redirect
• Useful when deceased had no will

Professional Advice

Get advice from a solicitor or tax adviser if:

• Estate over £325,000
• Property involved
• Creating trusts
• Multiple beneficiaries affected
• International elements
• Charity gifts calculated for 36% rate
• Any uncertainty about tax position