When someone dies and leaves you money, property, or a share of their estate, you do not have to keep it as they left it. UK law lets a beneficiary redirect their inheritance to someone else using a document called a deed of variation, and if it is done within a strict time limit, the tax system treats the gift as though it came from the person who died rather than from you.
People use deeds of variation to save inheritance tax, to provide for a grandchild born after the will was written, to help a relative who was left out, or to put right an outdated or unfair will without going to court. This guide explains what a deed of variation is, the two-year deadline that governs everything, who has to agree, how it changes inheritance tax and capital gains tax, what it costs, and the common misunderstandings that catch people out. Because the tax stakes are high and the rules are unforgiving, this is one document you should not attempt alone.
What a deed of variation is
A deed of variation is a legal document that lets a beneficiary give up all or part of an inheritance and redirect it to someone else. It is sometimes called an instrument of variation, a deed of family arrangement, or a deed of surrender. The key feature is the tax treatment: when the document is drafted correctly and made in time, the redirected inheritance is read back into the estate, so the tax rules treat it as though the deceased had left it that way from the start.
That read-back is what makes a deed of variation different from simply giving the money away yourself. Without it, passing on an inheritance would be a gift from you, subject to the usual seven-year inheritance tax gift rules. With a valid deed, the gift is treated as coming from the estate, so it can be far more tax-efficient.
You can use a deed of variation whether or not there was a will. It works for gifts made under a will, and it works where someone died without a will and the intestacy rules decided who inherits. The statutory basis, section 142 of the Inheritance Tax Act 1984, applies to a disposition “whether effected by will, under the law relating to intestacy or otherwise”.
The two-year time limit
A deed of variation must be made within two years of the date of death to receive the special tax treatment. This is the single most important rule, and it is not negotiable.
The deadline comes directly from the legislation. For inheritance tax, section 142(1) of the Inheritance Tax Act 1984 allows a variation of the dispositions of a deceased person’s estate made “within the period of two years after a person’s death”. For capital gains tax, section 62(6) of the Taxation of Chargeable Gains Act 1992 uses the same wording: the variation must be made “within the period of 2 years after a person’s death”. gov.uk states the rule plainly: “any changes to the will must be completed within 2 years of the death” (gov.uk – Alter a will after a death).
The two years run from the date of death, not from the date of the grant of probate or the date the estate is distributed. You can make a deed of variation before or after probate is granted, but the clock started on the day the person died.
Missing the deadline does not stop you giving away an inheritance, but it changes the tax picture entirely. After two years, redirecting your inheritance is treated as an ordinary lifetime gift from you, which brings the seven-year rule and potential capital gains tax into play, and the read-back into the estate is lost. Because the difference can be many thousands of pounds in tax, do not leave a variation to the last minute; solicitors need time to draft it correctly.
Why people use a deed of variation
There are four common reasons a family reaches for a deed of variation.
- Inheritance tax planning. Redirecting an inheritance to an exempt beneficiary can reduce the estate’s IHT bill. Passing a gift to a surviving spouse or civil partner uses the spouse exemption, which is unlimited. Redirecting to charity uses the charity exemption and, if the charitable gift reaches 10% of the net estate, can cut the IHT rate on the rest of the estate from 40% to 36%.
- Capital gains tax planning. Redirecting an asset such as a property or shares can change who is treated as acquiring it and at what base cost, which can help manage a future CGT liability.
- Providing for someone who was missed. A grandchild born after the will was written, a relative left out by mistake, or a beneficiary whose circumstances have changed can all be provided for by other beneficiaries giving up part of their share.
- Correcting an unfair or outdated will. Where the family agrees a will no longer reflects what the deceased would have wanted, a deed of variation can put it right by agreement, without the cost, delay, and uncertainty of a court claim.
A deed of variation is often used to skip a generation. An adult child who does not need the money can redirect their inheritance straight to their own children, keeping it out of their own estate for inheritance tax purposes while still treating the gift as coming from the grandparent’s estate.
Inheritance tax and capital gains tax read-back
The tax advantage of a deed of variation only applies if the document contains the correct statement. This is a formal requirement, and getting it wrong loses the benefit.
For inheritance tax, section 142(2) of the Inheritance Tax Act 1984 says the read-back “shall not apply to a variation unless the instrument contains a statement… to the effect that they intend the subsection to apply”. For capital gains tax, section 62(7) of the Taxation of Chargeable Gains Act 1992 requires “a statement by the persons making the instrument to the effect that they intend the subsection to apply to the variation”. In practice, a well-drafted deed states clearly that section 142 of the IHTA 1984 and, where relevant, section 62 of the TCGA 1992 are intended to apply.
The two statements are separate. A deed can elect for the inheritance tax read-back, the capital gains tax read-back, both, or neither, depending on what the beneficiaries want. As one firm of solicitors puts it, “if the beneficiary wants the deed of variation to benefit from retrospective IHT and/or CGT treatment, it is essential to include the relevant tax statement in the deed of variation” (Porter Dodson – Deeds of variation).
There is one further reporting step. If the variation increases the amount of inheritance tax due on the estate, the personal representatives must send a copy of the deed to HMRC within six months of it being made (gov.uk – Alter a will after a death).
Formal requirements for a valid deed
A deed of variation must meet several conditions to work. The table below sets out what each requirement is and why it matters.
| Requirement | What it means |
|---|---|
| In writing | The variation must be a written instrument. gov.uk says a formal deed is not strictly required and a letter can be enough, but a properly drafted deed is safer and is standard practice. |
| Made within two years | The instrument must be made within two years of the date of death (s142(1) IHTA 1984; s62(6) TCGA 1992). |
| Signed by those giving something up | Every beneficiary whose entitlement is reduced must sign. You can only redirect your own share. |
| Signed by personal representatives (sometimes) | Where the variation increases the inheritance tax payable, the executors or administrators must also sign (s142(2A) IHTA 1984). |
| Contains the tax statement | To get the read-back, the deed must state that s142 IHTA 1984 and/or s62 TCGA 1992 is intended to apply. |
| Not made for consideration | The variation must not be made in exchange for money or money's worth from outside the estate, or the tax read-back is lost. |
The “made by the persons who benefit” wording in the legislation is why consent matters so much. Under section 142(1), the instrument must be “made by the persons or any of the persons who benefit or would benefit under the dispositions”. Everyone left worse off by the change has to agree and sign.
Who can make a deed of variation, and who cannot
Any adult beneficiary with mental capacity can vary their own inheritance. That includes beneficiaries under a will and people inheriting under the intestacy rules. Because you can only give away what you would have received, a variation that changes who benefits needs the agreement of every beneficiary whose share is reduced.
Two situations need extra care. Where a beneficiary is a minor (under 18) or unborn, they cannot consent, and a parent cannot simply agree on their behalf. If a variation would reduce a child’s or unborn beneficiary’s entitlement, it needs the approval of the court. Solicitors confirm this: “where beneficiaries are minors or lack capacity, the court’s approval is needed” (Premier Solicitors), and “if a variation affects minors (i.e. children under 18) or unborn beneficiaries, court approval is likely to be required” (Porter Dodson). The court will only approve a variation that is for the benefit of that vulnerable beneficiary. The same applies where a beneficiary lacks the mental capacity to agree.
This is one of the clearest points at which a deed of variation stops being a DIY job. If any affected beneficiary is a child, unborn, or lacks capacity, you need a solicitor and, often, a court application.
Deed of variation vs disclaimer
A deed of variation is not the only way to redirect an inheritance. A disclaimer is a simpler alternative, but it gives you far less control. The table shows the difference.
| Feature | Deed of variation | Disclaimer |
|---|---|---|
| What it does | Redirects your inheritance to a person you choose | Refuses the inheritance entirely |
| Choose who benefits instead | Yes – you decide | No – it passes to whoever is next in line under the will or intestacy |
| Vary part of a gift | Yes | No – you cannot disclaim part of a single gift and keep the rest |
| Two-year tax read-back | Yes, with the correct statement | Yes, within two years |
| Best for | Directing an inheritance to a specific person, such as a grandchild or charity | Simply stepping out of the way when you are happy for the default beneficiary to take it |
A disclaimer suits the beneficiary who wants nothing to do with a gift and is content for it to pass to whoever would take it next. A deed of variation is the tool when you want to choose exactly where your inheritance goes.
What a deed of variation costs
There is no fixed price, because the cost depends on how complex the estate and the change are. For a straightforward variation, expect legal fees of a few hundred pounds. As Premier Solicitors describes it, “a straightforward deed of variation that makes a minor adjustment to the distribution of an estate may cost a few hundred pounds in legal fees”, while “more complex deeds, involving multiple beneficiaries, tax planning, or significant assets such as property or shares, can cost significantly more” (Premier Solicitors).
Across UK solicitor firms, a simple solicitor-drafted deed of variation commonly falls in the region of £500 to £1,250 plus VAT, with complex tax-planning deeds and any involving a court application costing more. Where a variation affects a minor or unborn beneficiary and needs court approval, the cost rises considerably because of the application itself.
Set the fee against what is at stake. On a taxable estate, a deed that redirects a gift to a spouse or charity can save tens of thousands of pounds in inheritance tax, so the drafting cost is usually small next to the potential saving. That is also the reason not to cut corners: a cheap or incorrect deed that loses the tax read-back is a false economy.
Common misconceptions
- It does not let you rewrite the whole will. A deed of variation only redirects the inheritance you personally would have received. You cannot change the executors, alter a gift left to someone else, or override the deceased’s other wishes.
- It does not usually need court approval. For adults with capacity, no court is involved. The exception is where the change would reduce the entitlement of a minor, an unborn beneficiary, or someone who lacks capacity, in which case the court must approve it.
- It does not have to be a formal “deed”. gov.uk confirms you do not always need a formal document and a letter can be enough, provided the change meets all the conditions. In practice a properly drafted deed is used because it is clear and reduces the risk of a mistake.
- It is not only for reducing tax. Plenty of variations are made simply to provide for someone who was overlooked or to settle a family arrangement fairly.
- It does not change the will’s validity. The original will still stands. The deed sits alongside it and redirects one or more gifts.
Getting a deed of variation drawn up
Because the tax rules are strict and the wording of the statutory statement has to be right, a deed of variation is not a document to attempt yourself where any real money or tax is involved. A solicitor will confirm the deadline has not passed, identify who must sign, draft the correct inheritance tax and capital gains tax statements, and check the change does not create an unexpected tax charge elsewhere. Where a variation affects a child, an unborn beneficiary, or someone who lacks capacity, they will advise on the court application that the law requires.
You can find a solicitor who specialises in wills and probate through the Law Society’s Find a Solicitor service. If your inheritance is straightforward and you simply want to step aside so the next beneficiary takes it, ask whether a disclaimer would do the job more cheaply. If you want to direct the inheritance to a specific person or make use of a tax exemption, a deed of variation is usually the right tool, and it is worth doing properly.
Summary
A deed of variation lets a beneficiary redirect all or part of an inheritance to someone else, and if it is made within two years of the death and drafted correctly, the tax system treats the gift as though it came from the person who died. It can save inheritance tax, manage capital gains tax, provide for someone who was left out, and correct an unfair will without going to court. It works under a will or under intestacy, but it only lets you give away your own share, everyone left worse off must agree and sign, and it needs the right statutory statement to secure the tax treatment. Variations affecting children or unborn beneficiaries need court approval. Given the tax stakes and the strict rules, use a solicitor rather than attempting it yourself.
Key sources
- gov.uk – Alter a will after a death – official guidance on deeds/instruments of variation, the two-year limit, who must agree, and HMRC notification
- Inheritance Tax Act 1984, Section 142 – the two-year limit, scope (will/intestacy/otherwise), and the statement requirement for the IHT read-back
- Taxation of Chargeable Gains Act 1992, Section 62 – the two-year limit and statement requirement for the CGT read-back (s62(6) and s62(7))
- Porter Dodson Solicitors – Deeds of variation – the tax statement requirement and court approval for minors/unborn beneficiaries
- Premier Solicitors – What is the cost of a deed of variation – cost guidance and court approval for minors/those lacking capacity
- The Law Society – Find a Solicitor
This guide covers the law in England and Wales. It is for information only and does not constitute legal or tax advice. Deeds of variation have significant inheritance tax and capital gains tax consequences: to make one, and especially where a child, an unborn beneficiary, or a large or complex estate is involved, speak to a solicitor who specialises in wills, probate, and estate planning.