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A deed of variation (DoV) allows beneficiaries to redirect assets they have inherited within two years of death. It cannot change lifetime gifts made by the deceased, but it can meaningfully reduce IHT on the estate — and is worth considering whenever the original will or intestacy rules produce a tax-inefficient outcome.
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Deeds of variation involve legal complexity — always use a solicitor. This guide explains the IHT principles. For general IHT planning see our IHT planning checklist.
A deed of variation (also called a deed of family arrangement) is a legal document that allows the beneficiary of an estate — whether under a will or intestacy — to redirect some or all of what they have inherited to someone else. Provided it meets the requirements of section 142 of the Inheritance Tax Act 1984, the variation is treated as if it had been made by the deceased.
This is significant because:
A deed of variation can only redirect what was inherited — it cannot change what the deceased did in their lifetime. In particular:
The Autumn 2024 Budget made significant changes to IHT — including changes to BPR, APR, and pension IHT from 2027. Many existing wills were drafted before these changes and may no longer produce the most tax-efficient outcome. Deeds of variation can be used to:
If a beneficiary inherits assets that do not qualify for IHT reliefs, and those assets could instead be redirected to a charity (reducing the estate's IHT to 36%) or to other beneficiaries in a more tax-efficient structure, a deed of variation can achieve this.
If a child has a large estate of their own, inheriting further assets will increase their eventual IHT bill. A deed of variation can redirect the inheritance to grandchildren, effectively passing wealth down a generation without a further IHT charge.
If the deceased's will left less than 10% to charity, beneficiaries can redirect part of their inheritance to charity via a deed of variation, potentially triggering the 36% IHT rate. This requires careful calculation to ensure the tax saving from the reduced rate exceeds the amount redirected to charity.
If the deceased died without a will, the intestacy rules may produce a distribution that does not match what the family would have wanted and is not IHT-efficient. A deed of variation can redirect the distribution within two years of death.
The RNRB is only available where a qualifying residential property passes to direct descendants. If the will does not satisfy this condition, a deed of variation can redirect the property to descendants to unlock the RNRB. See our guide to the residence nil-rate band.
Example: Using a deed of variation to trigger the RNRB
Now suppose wife's will had left everything to her siblings — no RNRB would apply. Taxable estate: £900k − £650k NRB = £250k at 40% = £100,000 IHT. A deed of variation redirecting the home to the children could unlock the RNRB and eliminate the IHT.
HMRC has in the past considered restricting deeds of variation but has not done so. They remain effective for IHT and CGT purposes where the statutory requirements are met. HMRC does scrutinise deeds that appear to be abusive or that are made for consideration.
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