Deed of variation explained: how to change a will after death

What a deed of variation does

The clock starts on the date of death, and it runs for exactly two years. Inside that window, a beneficiary of an estate can sign a written variation redirecting some or all of their inheritance to someone else, and the change is treated for inheritance tax (and, if elected, capital gains tax) as though the deceased had written it into the will themselves. Once the two years are up, the door closes: there is no extension, no late-filing route, and no discretion for HMRC to exercise.

That "reading back" is what makes the instrument powerful. The redirected gift never counts as a gift from the beneficiary, so no 7-year survival clock hangs over it, and the estate's tax bill is recalculated as if the will had always said what the variation now says. Within the rules, a variation can move an inheritance to a surviving spouse for the 100% exemption, skip a generation, or lift a charitable legacy over the 10% line that drops the inheritance tax rate on the whole taxable estate from 40% to 36%. This guide covers the conditions, what a variation can and cannot achieve, and where the traps sit. It reflects the law of England and Wales, and while inheritance tax itself works the same way across the whole of the UK, Scottish succession law takes its own view of who inherits by default. Treat everything here as general information rather than legal or financial advice.

What a deed of variation actually is

It helps to separate the legal mechanism from the tax planning, because they do different jobs. Legally, nothing stops a beneficiary giving away what they have inherited; you can always hand your legacy to your sister the day after you receive it. The problem is tax. Without more, that handover is your gift: a potentially exempt transfer that stays in your estate if you die within 7 years, exactly as our guide to the 7-year gift rule explains.

Section 142 of the Inheritance Tax Act 1984 changes that. Where a qualifying variation is made, the Act applies "as if the variation had been effected by the deceased". The middle step vanishes for inheritance tax: the asset is treated as passing straight from the deceased to the new recipient, the original beneficiary makes no transfer at all, and the estate's inheritance tax is recalculated on the varied destination. An equivalent election exists for capital gains tax under the Taxation of Chargeable Gains Act 1992, so the new recipient can take the asset at its date-of-death value rather than triggering a disposal by the original beneficiary.

Two points of housekeeping. First, despite the traditional name, GOV.UK confirms that no formal deed is required: "you can write a letter as long as it meets these conditions". In practice most are professionally drafted deeds, because an error is expensive and largely irreversible. Second, a variation works just as well where there was no will at all. The intestacy rules simply stand in for the will, so a family can vary the outcome our guide to who inherits when there is no will describes, for example redirecting a child's statutory share to the surviving parent.

The conditions: every one of them matters

HMRC's Inheritance Tax Manual at IHTM35021, read with section 142 itself, sets out what a variation must do to be read back:

1. In writing. An oral agreement achieves nothing for tax, however unanimous the family is.
2. Within two years of the death. The instrument must be made, signed and complete inside the two-year window. There is no extension and no discretion. Miss it and any redirection is an ordinary lifetime gift by the beneficiary.
3. Signed by everyone who loses out. The beneficiary (or beneficiaries) giving up value must execute the instrument. Beneficiaries whose shares are untouched need not be involved. Where the variation means more inheritance tax is payable, the personal representatives must join in the statement too; they can only refuse if the estate lacks the assets to pay the extra tax.
4. The statement of intent. For instruments made since 1 August 2002, the document must contain a statement by all the relevant persons that they intend section 142(1) to apply, and, if capital gains tax reading-back is wanted, an equivalent statement for the CGT provision. No statement, no reading back: the variation would still move the property, but as the beneficiary's own gift. HMRC publishes a checklist, form IOV2, for testing an instrument against the conditions.
5. No consideration. Section 142(3) disqualifies any variation made "for any consideration in money or money's worth", other than another variation within the same estate. If your brother pays you £50,000 to redirect the holiday cottage to him, the reading back fails. The redirection must be genuinely gratuitous.
6. Clearly identified property. The instrument must clearly indicate which dispositions of the estate it varies and how their destination changes. Vague drafting is a classic failure point.

Two follow-on duties sit alongside the conditions. If the variation increases the inheritance tax bill, a copy must go to HMRC within 6 months of the date it is made, with a calculation of the extra tax. And where property is redirected to a charity, section 142(3A) requires that the charity is actually notified of the variation's existence, a detail that catches out home-drawn documents.

What a deed of variation can achieve

1. Redirect to a spouse or civil partner for the 100% exemption

Suppose a will leaves £400,000 directly to an adult son, with the residue to the surviving spouse. The gift to the son uses the deceased's £325,000 nil-rate band and leaves £75,000 taxed at 40%, a £30,000 bill. If the son does not need the money now, he can vary his legacy to his surviving parent. Read back, the whole £400,000 passes spouse-to-spouse, fully exempt, no tax, and the deceased's unused nil-rate band and residence nil-rate band transfer to the survivor, as our guide to the married couples' threshold explains. One caution: HMRC's manual at IHTM35093 flags schemes where the spouse quietly hands the money straight back to the original beneficiary by pre-arrangement, and instructs officers to investigate whether that return was agreed before the variation was signed. A genuine variation redirects genuinely.

2. Skip a generation

An inheritance received by someone in their sixties often lands in an estate that is already over the thresholds, waiting to be taxed again at 40% within a couple of decades. A variation lets that beneficiary pass the inheritance straight to their own children or into a trust for grandchildren, and because the gift is read back to the deceased, the middle generation never owns it, their estate never grows, and no 7-year clock starts against them. This is a frequent and useful tool in blended families, where a will drawn years earlier no longer matches who actually needs what.

3. Reach the 10% charity threshold for the 36% rate

Where at least 10% of an estate's baseline amount (broadly, the net estate after debts, exemptions and the nil-rate band, but before the charitable gift itself) passes to charity, the inheritance tax rate on the rest drops from 40% to 36%. A deed of variation is one of the main routes to that threshold after death, because wills are often drafted just short of it. Take a £1,000,000 estate with a full £325,000 nil-rate band and a £20,000 charity legacy in the will. The baseline is £675,000, so the 10% target is £67,500; the will's £20,000 falls short and the taxable £655,000 is taxed at 40%, a bill of £262,000. If the residuary beneficiaries vary the will to top the charitable gift up to £67,500, the taxable estate becomes £607,500 taxed at 36%: a bill of £218,700. The charity gains £47,500, the tax falls by £43,300, so the extra gift costs the family just £4,200 net. Our full guide to leaving 10% to charity for the 36% rate works through the baseline calculation in detail, and you can model your own figures with the IHT threshold calculator.

Variation or disclaimer? Not the same thing

A disclaimer is the blunter cousin: the beneficiary simply refuses the gift, in writing, within the same two-year window and with the same no-consideration rule. The critical difference is control. A disclaimed gift falls back into the estate and passes under the will's default terms or the intestacy rules; the disclaiming beneficiary has no say in where it lands. A variation, by contrast, names the new recipient. A disclaimer also has to be made before the beneficiary accepts any benefit from the gift, whereas a beneficiary can vary an inheritance they have already received. Unless the fallback destination is exactly what you want, a variation is nearly always the safer instrument.

The limits and the traps

• Minors and beneficiaries lacking capacity. A child under 18, or an adult without mental capacity, cannot sign away their inheritance, and nobody can sign it away on their behalf informally. Varying such a share generally requires an application to the court, which will only approve a change that benefits that beneficiary. Do not assume a family consensus is enough.
• One bite only. HMRC's long-standing position is that the same property cannot be varied twice; you cannot redirect an asset, change your mind, and redirect it again with reading back. Treat a variation as effectively irreversible.
• Income tax is not read back. Section 142 works for inheritance tax, and the parallel election for capital gains tax, but not for income tax. For income tax the original beneficiary is treated as the settlor of anything they redirect, which matters where income-producing assets are varied into trust or to the beneficiary's own minor children. This is one of several second-order effects, along with possible stamp duty land tax questions where mortgaged property is redirected, where the precise treatment depends on the facts and specialist advice is essential; we deliberately do not quote figures here.
• Means-tested benefits and deliberate deprivation. A beneficiary who gives away an inheritance while receiving, or about to claim, means-tested support risks the redirection being treated as deprivation of assets. The tax reading-back does not bind other authorities.
• It cannot conjure reliefs. A variation re-routes what is in the estate; it does not create business or agricultural relief for assets that never qualified, and it cannot rewrite lifetime gifts the deceased made before death.

Executors do not have to be parties to most variations, but they administer the consequences, from recalculated tax to the 6-month HMRC copy, so early coordination matters; our executors hub covers where a variation sits in the wider administration alongside the rest of the probate process.

Getting it right first time

A deed of variation is a genuinely rare thing in tax: a planning opportunity that remains open after death. It is also a one-shot document with a hard two-year deadline, statutory wording requirements, and consequences across at least three taxes. If an estate you have inherited from looks taxable, run the numbers through the IHT threshold calculator, read the wider framework in our inheritance tax guide, and then have a specialist draft the instrument rather than adapting a template. Above all, respect the clock. The two-year deadline cannot be extended for any reason, professional drafting takes time, and every required signature must be in place before it expires. If a variation might help your family, we can put you in touch with an estate-planning specialist while there is still comfortable room before the deadline runs out.