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A deed of variation (DoV) allows a beneficiary to redirect assets they have inherited, within two years of the death. It cannot change lifetime gifts made by the deceased. Where the statutory conditions in section 142 of the Inheritance Tax Act 1984 are met, the redirection is treated for inheritance tax as though the deceased had made it, so the tax on the estate is recalculated on the varied distribution.
This guide explains what a deed of variation is and the statutory conditions it has to meet. It does not recommend using one. For general IHT background 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. The allowance for 100% agricultural and business relief was set at £2.5 million, not the £1 million first announced, and took effect on 6 April 2026. Many wills were drafted before any of this. Within two years of a death, a variation is one of the few mechanisms that can change how an estate is distributed. It is used to:
Where a beneficiary inherits assets that do not qualify for IHT reliefs, the variation can redirect them — for example to a charity, or to other beneficiaries — and the tax on the estate is recalculated accordingly.
Where a beneficiary already has a large estate of their own, an inheritance adds to it. A variation can redirect the inheritance to grandchildren instead, and because the redirection is read back to the deceased it is not itself a transfer by the original beneficiary.
The reduced rate applies where at least 10% of the baseline amount — broadly the estate after exemptions, reliefs and the nil-rate band — passes to charity. Where a will leaves less than that, a variation can redirect part of an inheritance to charity and bring the component within the 36% IHT rate. Whether that leaves the other beneficiaries better off depends on the figures: the reduced rate applies to the rest of the component, but the amount redirected leaves the estate.
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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