A deed of variation allows the beneficiaries of a will to redirect an inheritance after the person has died — as if the deceased had written the will that way originally. It is a powerful tool for reducing Inheritance Tax, skipping generations, and correcting wills that were not updated before death. The deadline is two years from the date of death. Here is how it works in 2026/27.
What Is a Deed of Variation?
When someone dies, their estate passes according to their will (or intestacy rules if there is no will). A deed of variation is a legal document signed by the beneficiaries that redirects some or all of an inheritance to a different person or organisation.
Key principle: HMRC “reads back” the variation into the original will — so IHT is calculated as if the deceased had left the money to the new recipient from the start.
Requirements for a valid deed of variation:
- Must be made within two years of death
- Must be in writing and signed by all affected beneficiaries
- Must contain specific statements if IHT or CGT read-back treatment is required
- No consideration (payment) can be given to the varying beneficiary in return
Ways a Deed of Variation Can Reduce IHT
1. Redirecting to a spouse or civil partner
If the will left assets to children but the surviving spouse needs them, a deed of variation redirecting the inheritance to the spouse uses the spousal exemption — completely eliminating IHT on that transfer.
2. Redirecting to charity
Redirecting part of an estate to charity:
- Uses the charitable exemption (fully IHT-free)
- May trigger the 36% reduced IHT rate if the charity receives at least 10% of the net estate
- The charity donation is treated as the deceased’s, not the beneficiary’s, so there is no Gift Aid complication
3. Using an unexhausted nil-rate band
If the original will leaves assets in a way that does not fully utilise the deceased’s nil-rate band, a variation can redirect assets to ensure the NRB is fully used.
4. Generation-skipping
If an adult child inherits but already has a large estate, varying the inheritance directly to grandchildren avoids a double IHT charge. The variation is not a gift by the adult child — it is treated as the deceased’s own bequest.
Worked Example: Generation-Skipping
Robert, aged 70, inherits £200,000 from his mother. His own estate is already worth £800,000 — well above the IHT threshold.
If Robert keeps the £200,000:
- It becomes part of his estate
- On his eventual death, his estate = £1,000,000+
- The £200,000 will be taxed at 40% = £80,000 extra IHT
If Robert varies the inheritance to his children (aged 35 and 38) directly:
- The £200,000 goes to Robert’s children immediately
- It is not treated as a gift from Robert — no PET, no 7-year rule
- Robert’s estate remains at £800,000 — the IHT liability is not increased by the extra £200,000
- Saving: up to £80,000 in IHT on Robert’s eventual estate
The Two-Year Deadline: Why It Matters
The two-year deadline runs from the date of death — not probate, not distribution of assets. If assets have already been paid out to beneficiaries, a deed of variation can still be made as long as all affected parties agree and the two-year window has not passed.
Missing the deadline means the variation cannot be read back into the will for IHT purposes. Any redirection after two years is treated as the beneficiary making a gift — starting a PET 7-year clock.
The Election Statement: Getting It Right
To benefit from the HMRC read-back treatment, the deed must include specific statements:
- For IHT purposes: a statement under Section 142 IHTA 1984 that the variation is to have effect for IHT
- For CGT purposes: a statement under Section 62(6) TCGA 1992 that the variation is to have effect for CGT
If either statement is omitted, the relevant read-back does not apply. This is a technical requirement — most solicitors drafting deeds of variation include both automatically.
Costs and Process
A deed of variation is a legal document — a solicitor should be used, especially for larger estates or complex families.
| Step | Detail |
|---|---|
| Agree the variation with all beneficiaries | All affected parties must consent |
| Instruct a solicitor to draft the deed | Typically £500–£1,500 |
| Ensure correct election statements are included | Essential for tax read-back |
| Notify HMRC if IHT is affected | Executors send a copy to HMRC if IHT changes |
| Complete any Land Registry transfer if property is involved | Additional legal work required |
If the estate is simple and beneficiaries agree, some solicitors offer fixed-fee deed of variation services.
Common Situations Where a Deed of Variation Helps
| Scenario | Benefit |
|---|---|
| Will leaves everything to adult children but surviving spouse needs income | Redirect to spouse → spousal exemption eliminates IHT |
| Adult beneficiary already has large estate | Vary to grandchildren → generation skip, saves double IHT |
| Will does not mention charity | Redirect some to charity → 36% rate may apply |
| Will was outdated (e.g. a sibling who has died) | Redirect to living beneficiaries correctly |
| Intestacy with no will | Deed of variation also works for intestate estates |
See our inheritance tax guide, charity giving and IHT, and residence nil rate band.