Glossary · UK
What is Deed of Variation?
A legal document letting a beneficiary redirect their inheritance to someone else, treated for tax as if the deceased had made the gift.
Full Definition
A deed of variation (also called a deed of family arrangement) allows a beneficiary of a deceased person's estate to redirect some or all of their entitlement to another person or to a trust. It can change gifts made under a will or under the intestacy rules. To be effective for tax purposes it must be made in writing within two years of the death, signed by the beneficiaries giving up their entitlement, and contain a statement that the relevant statutory provisions are to apply. When it does, the redirection is read back as if the deceased had made the gift, so for Inheritance Tax it is not treated as a transfer by the original beneficiary, avoiding a potentially exempt transfer that could fail under the seven-year rule. A similar reading-back can apply for Capital Gains Tax, which matters where assets such as property or shares have risen in value. Common uses include skipping a generation, passing assets to grandchildren, or directing 10% or more of the estate to charity to reduce the IHT rate from 40% to 36%. The nil-rate band remains £325,000 and the residence nil-rate band £175,000 for 2026/27. The rules apply UK-wide, though Scotland's distinct succession law affects how entitlements arise.