Deed of Variation Tax Calculator

A deed of variation (also called a deed of family arrangement) allows beneficiaries to redirect all or part of their inheritance to someone else within 2 years of the deceased's death. The redirection is treated for tax purposes as if the deceased had made the gift.

If you redirect your inheritance to a charity, it becomes IHT-exempt. If 10%+ of the net estate goes to charity, the entire estate qualifies for the reduced 36% IHT rate instead of 40%, potentially saving tens of thousands of pounds.

Deeds of variation must be executed within 2 years of the date of death to receive the inheritance tax and capital gains tax treatment. After 2 years, the original distribution stands for tax purposes.

If you redirect inheritance to your children or grandchildren, it removes future growth from your estate. While it doesn't reduce the current estate's IHT, it can reduce IHT on your own future estate — especially valuable for large inheritances you don't need.

Only beneficiaries who are affected by the change need to agree. For example, if you're varying your own share, only you need to sign (plus any children affected if under 18, who require court approval).

The deed of variation also has CGT effect — assets are treated as if the deceased had bequeathed them to the new beneficiary directly. This resets the cost basis to date-of-death value, potentially reducing future CGT.

Yes — this is a common use. If siblings received unequal shares, a deed can redistribute to create fairness. As the variation is treated as the deceased's choice, no gift is made between beneficiaries for tax purposes.

You need a solicitor to draft the deed properly. For complex estates, a tax adviser familiar with IHT is also recommended. HMRC requires the deed to be in writing, signed and dated — verbal or informal arrangements don't qualify.

Yes — a deed can redirect inheritance into a discretionary trust, which provides flexibility for future distributions. However, trust entry charges (20% IHT on amounts above NRB) and ongoing 10-year anniversary charges apply.

If the net estate (after NRBs) donates 10%+ to charity via a deed, the remaining IHT rate drops from 40% to 36%. On a £200,000 taxable estate, this saves £8,000 while the £20,000 charity gift reduces estate by £20,000 — net cost of charity gift is only £12,000.

No — deeds of variation only apply to inheritances under a Will or intestacy. Lifetime gifts made more than 7 years before death are already outside the estate and cannot be varied.

Different approaches: a disclaimer means you simply refuse your inheritance (which passes per the Will or intestacy rules). A deed of variation lets you specifically redirect to a named person or charity — giving more control over where it goes.