What a deed of variation is
A deed of variation (HMRC calls it an instrument of variation) is a document that changes how a dead person's estate is shared out. The beneficiaries agree to redirect something they were due to receive, such as a share in a house, to someone else. It can be used where there is a will or where the estate passes under the intestacy rules.
HMRC's manual makes a useful point: the document does not change the will itself, only the effect of the will. The will stays as written, and the estate is then dealt with as the variation says.
People use variations for many reasons, for example to pass something to a child rather than a parent, or to correct how the estate is shared out. Whether it suits your situation is a question for a solicitor.
The two-year time limit
A variation must be made within two years of the date of death. HMRC's Inheritance Tax Manual says the two-year period includes the anniversary of the death, that everyone must have signed within it, and that there is no discretion about this.
As a hypothetical illustration: for a death on 10 June 2025, the last day to sign would be 10 June 2027. Do not leave it to the last week, because a missing signature means the change fails for tax purposes.
HMRC also says you do not have to wait for the grant of representation, and a variation can still be made after the estate has been fully administered and property distributed.
Who must sign
The people who are giving up all or part of what they would receive must be parties to the instrument. HMRC's Capital Gains Manual says so, and the Self Assessment helpsheet for personal representatives repeats it. Your solicitor will confirm everyone else who should sign, including any executors.
The statute only requires the variation to be in writing. HMRC's manual says it does not have to be a formal deed, although in practice a solicitor will normally draw it up as a deed, with the right wording.
Tax: inheritance tax, capital gains tax and stamp duty
The conditions are strict. HMRC's checklist form for variations (IOV2) is designed to help meet them.
| Tax | What happens if the conditions are met | The key condition |
|---|---|---|
| Inheritance tax | Treated as if the person who died made the change; not a transfer of value by the beneficiary | A statement that section 142(1) Inheritance Tax Act 1984 is to apply |
| Capital gains tax | Not a disposal for CGT purposes | A statement that section 62(6) Taxation of Chargeable Gains Act 1992 is to apply |
| Stamp duty land tax | Exempt as a post-death variation | Made within two years of the death, with no consideration other than another variation |
Inheritance tax
For instruments executed on or after 1 August 2002, HMRC says the instrument must contain a valid statement of intent that section 142(1) applies. Without it, the instrument is ineffective for section 142(1). If the conditions are met, the redirection is treated as made by the person who died, so it is not a transfer of value by the person giving up the gift.
If a variation falls outside section 142(1), HMRC says it is treated like any other dealing with your own property. It may be a potentially exempt transfer, which can be taxed if the person who made it dies within seven years.
Capital gains tax
HMRC's helpsheet says that a variation is not a disposal for CGT purposes if the conditions are met: it is in writing within two years of the death, those giving up an entitlement are parties to it, no money or money's worth is given for it, and it contains a statement that the parties intend section 62(6) to apply.
Stamp duty land tax
HMRC's SDLT manual describes an exemption for a transaction after a death that varies how the deceased's property is distributed. It applies where the transaction is carried out within two years of the death and no consideration is given other than another variation. A secured debt taken on by the recipient does not count as consideration.
Payment, and why it matters
If anyone pays or receives something outside the estate in return for a variation, the tax treatment can be lost. HMRC's manual explains that section 142(1) does not apply to a variation made for consideration in money or money's worth that is not provided out of the estate. Never agree "you give up your share and I'll pay you" without advice.
Property-specific points
A variation changes who is entitled. It does not, on its own, change the register at HM Land Registry. Registered property is transferred through the usual route for dealing with a dead owner's property.
HM Land Registry's practice guide 6 sets out the evidence required when personal representatives transfer or assent registered property after an owner's death, in section 3.3. The guide does not specifically address variations, so ask your conveyancer how the variation will be shown when the property is transferred.
If the property has a mortgage, tell your solicitor early, because the lender's position needs to be dealt with as well.
Cost and how long it takes
Solicitors quote their own fees for preparing a variation, and the cost depends on how complicated the estate and the wording are. We do not quote a figure because fees are set by each firm. Ask for a fixed quote in writing and ask what is included.
How long it takes depends on how quickly everyone can be found, agree and sign. The only fixed date is the two-year deadline.
When not to use one
A variation is not right for every situation. Take advice before you sign if:
- you are being offered money or something else for giving up your share, which can lose the tax treatment;
- you or the person giving up their share is in financial difficulty or facing bankruptcy. Under section 339 of the Insolvency Act 1986, a trustee in bankruptcy can ask the court to undo a gift or other transaction for no consideration. Whether a particular variation counts depends on the facts;
- you receive means-tested benefits or help with care costs. Check with a solicitor or an advice charity how giving up an inheritance could be treated;
- the beneficiary who would lose out has not agreed, because no one can be made to give up their share.
Deed of variation of a lease: a different thing
You may also see "deed of variation" used for changes to a lease, such as the ground rent, the length or the rules in the lease. That is a different document from the one in this article. It is usually agreed between the landlord and the leaseholder, and in some cases a leaseholder or landlord can apply to the First-tier Tribunal. GOV.UK's Form Leasehold 4 is used for that, under sections 35 to 40 of the Landlord and Tenant Act 1987. For background, read about ground rent and the tenure and lease checks.
Inherited house you want to sell
If a house passes to you through an estate and you decide to sell, the order of events matters. The variation, the probate process and any tax decisions come first, then the sale.
- Check who will legally own the house after the variation, because only the owner or the personal representatives can sell it.
- Look at inheritance tax and capital gains tax before you sell, not after. Our inheritance tax checker gives an indicative estimate, and the CGT calculator helps with gains.
- Use the inherited options tool for an honest steer on keeping, renting or selling, and read our guide to selling an inherited property.
- See the probate timeline tool for the steps and deadlines.
Speak to a conveyancing solicitor, and to a tax adviser if the estate is large, before you commit to a route.