Deed of variation: how to change who inherits from an estate in the UK
This guide explains how a deed of variation works, why families use one, who has to agree, and what it cannot do.
A deed of variation lets a beneficiary redirect some or all of what they inherit to someone else, after a death. You have two years from the date of death to make one. Done correctly, the law treats the redirected gift as though the person who died had left it that way, which can change the inheritance tax and capital gains tax position on the estate.
It is a useful tool, but a precise one. The deadline is strict, the wording matters, and not every situation suits it. This guide explains how a deed of variation works, why families use one, who has to agree, and what it cannot do.
What a deed of variation is
A deed of variation is a written document signed by a beneficiary who chooses to pass on part or all of their inheritance to a different recipient. It is sometimes called a deed of family arrangement or an instrument of variation.
It does not rewrite the will. The original will stays valid. The deed sits alongside it and records the beneficiary's decision to vary their own entitlement. You can also use one where there is no will, to redirect what you would receive under the intestacy rules.
The key point is who is treated as making the gift. Without a deed, if you inherit and then give the money away, that is your gift, and it counts as a transfer from you. With a valid deed of variation, the redirected gift is treated as coming from the person who died, not from you.
The two-year rule
There is a hard deadline. A deed of variation must be signed by everyone involved within two years of the date of death. The two years includes the anniversary of the death itself, and there is no discretion to extend it. If the deed is signed after that window, it can still work as a straightforward gift, but it loses the special tax treatment described below.
Because the clock runs from death, not from probate, it is worth deciding early whether a variation might help. Families often have a much clearer picture of the estate after a few months than the person who wrote the will ever did.
How the tax "reading back" works
The tax advantage comes from two pieces of legislation, and you only get it if the deed says so in plain terms.
For inheritance tax, section 142 of the Inheritance Tax Act 1984 lets the redirected gift be read back to the date of death, as if the deceased had left it directly to the new recipient. The deed must include an express statement that section 142 is to apply.
For capital gains tax, section 62(6) of the Taxation of Chargeable Gains Act 1992 does the same, treating the redirection as made by the deceased. This needs its own separate statement in the deed. The two elections are independent, so one does not include the other.
The reading back is what makes the deed powerful. Because the gift is treated as coming from the estate rather than from you, the seven-year rule that applies to lifetime gifts does not bite on the person redirecting the inheritance.
Why people use a deed of variation
There are a few common reasons.
To skip a generation. A beneficiary who does not need the money can redirect it to their own children or grandchildren. Because the gift is treated as the deceased's, it does not sit in the redirecting beneficiary's estate for inheritance tax.
To preserve allowances across a couple's estates. If a will leaves assets in a way that wastes the first person's nil rate band or residence nil rate band, a variation can redirect assets to make better use of those allowances on the second death. The standard nil rate band is £325,000 and is frozen until April 2031, so using it efficiently can matter.
To support a charity and reduce the rate of tax. If at least 10% of the net estate passes to charity, the inheritance tax rate on the rest of the estate drops from 40% to 36%. A variation can be used to reach that threshold.
To rebalance or provide for someone who was left out. Beneficiaries sometimes agree to even up shares, or to provide for a family member the will did not cover.
If you want to understand the wider inheritance tax position first, our guide to the inheritance tax threshold sets out the current rules.
Who has to agree
Anyone whose share is reduced by the change has to agree to it and sign the deed. Nobody can be forced to give up part of their inheritance, whatever other family members expect.
Everyone signing must have the mental capacity to understand what they are doing. A beneficiary who is under 18 or who lacks capacity cannot agree on their own behalf, and a parent cannot simply sign for them. In those cases the court's approval is needed, which adds time and cost.
The executors or administrators usually do not need to be parties. They only sign where the variation increases the amount of inheritance tax due, or where it affects how the estate is administered.
What a deed of variation cannot do
A deed of variation is flexible, but it has limits.
It cannot rewrite the whole will or change who the executors or guardians are. It cannot increase your own entitlement, only redirect what you already receive. It cannot involve payment, because the variation has to be a genuine gift. If money or anything of value changes hands in return, the tax treatment is lost and it becomes your own gift instead.
It cannot redirect assets you have already sold or given away. And it cannot be used to dodge obligations. Trying to redirect an inheritance to avoid care fees or a means-tested benefits assessment can be treated as deliberate deprivation of assets, which defeats the purpose.
Telling HMRC
You do not always have to send the deed to HMRC. Notification is only required where the variation increases the amount of inheritance tax payable, and then it must reach HMRC within six months of the deed being made. That six-month notice period is separate from the two-year deadline for making the deed. Even where no notification is needed, keep signed copies with the estate records.
How a variation fits into the wider job
A deed of variation changes who ends up with the inheritance. It does not change the work of getting the estate to that point. Before anything can be redirected, the estate still has to be identified, valued and gathered in, which means tracking down the deceased's accounts and closing them.
That groundwork is the part families tend to underestimate. A person's assets can be spread across many separate organisations, and you cannot value or redirect what you have not yet found. Our guide on how to value an estate covers the valuation side. Legacy Trail handles the coordination side, finding and closing the accounts an estate is made up of, so the figures a variation depends on are accurate before any decision is made.
A deed of variation can save a significant amount of tax, but the wording and the timing carry real consequences. For anything beyond a simple redirection, it is sensible to get it drawn up by a solicitor.
References and further reading
HMRC, Inheritance Tax Manual IHTM35024: time limit for an instrument of variation
The Law Society, Find a solicitor
MoneyHelper, Death and bereavement: sorting out the estate
This guide is general information about deeds of variation in England and Wales. It is not legal or tax advice. Rules differ in Scotland and Northern Ireland. For advice on your own circumstances, speak to a solicitor or a qualified tax adviser.
This article is for general information only and does not constitute legal advice. Individual circumstances vary. If you are dealing with an estate, consider taking advice from a solicitor who specialises in probate. For other guidance specific to your circumstances, speak to a funeral director, Citizens Advice, or a regulated financial adviser.