How Much Does a Deed of Variation Cost?

At the firms that publish a figure, a deed of variation prepared on its own starts from around £350 plus VAT, and most will only quote properly once they have seen the estate. Where I am administering the estate, drafting the deed is part of the £1,880 fixed fee and there is no separate charge for it. Whatever it costs, it has to be signed within two years of the date of death. After that the tax treatment is gone for good.

People arrive here from one of two directions. Either the will sends money somewhere the family would rather it did not go, or the estate faces a tax bill that looks avoidable. Price is the first question, though the deadline and the list of people who have to sign decide whether a variation is possible at all, so start there.

Redirecting an Inheritance Has a Two-Year Deadline

After a death, a variation is the only route left to change who inherits and what tax the estate pays. A beneficiary can pass what they were left to somebody else, and the law treats the gift as though the deceased had made it. That is section 142 of the Inheritance Tax Act 1984, which allows it where the instrument is in writing and made within two years of the death.

Estates are often a year in administration before anyone has a clear picture of the numbers, and getting several relatives to read, consider and sign can absorb months more. It does not matter that the money has already gone out: section 142(6) applies whether or not the administration is complete and whether or not the property has been distributed.

Where there is no will the position is the same: GOV.UK’s guidance on changing a will after a death confirms an inheritance passing under the intestacy rules is varied the same way. The people who have to sign are the ones the will or the intestacy rules would otherwise have paid.

Everyone Who Loses Out Has to Sign

The statutory wording says the instrument must be made by the people who benefit, or would benefit, under the original dispositions. GOV.UK puts it the way I put it to families: anyone left worse off has to agree.

So the beneficiary giving something up signs. The one receiving it has no legal need to, though in most drafting they do. Executors come into it only where the variation produces more inheritance tax than the will would have done, because section 142(2A) makes personal representatives relevant persons who have to join in the statement of intent, and they can decline only where they are not holding enough of the estate to pay the extra.

One person cannot sign for another, and that is where variations most often come unstuck.

A Child’s Share Cannot Be Given Away Without the Court

A child cannot consent to losing an inheritance, and a parent cannot consent on the child’s behalf. HMRC’s manual at IHTM35045 says a variation that adversely affects the interests of minor or unborn beneficiaries can be fully valid only with the approval of the court, on an application under the Variation of Trusts Act 1958 or under the court’s inherent jurisdiction, and that a parent’s signature on behalf of a minor is not sufficient.

That changes the shape of the job: a court application, evidence that the change is in the child’s interest, and the delay both bring, all inside the same two years. Where children or unborn beneficiaries hold an interest the variation would cut into, my usual advice is to leave the will alone and look at what else can be done.

Where nobody is a minor and everybody is willing, what makes the exercise worth the work is section 142(1) itself.

Why the Redirected Share Never Counts as Your Gift

Where the conditions are met, the Act applies as if the deceased had made the variation, so the share passes from the estate straight to the new beneficiary. Take the money yourself and hand it on, and you have made a lifetime gift with a seven-year clock attached. Redirect it by variation and there is no clock, because for tax purposes it was never yours.

That read-back is also what brings the exemptions into play. Redirect a share to a spouse or civil partner and the estate’s bill falls, because that part is now exempt. Redirect 10% or more of the net estate to charity and the rate on the taxable part drops from 40% to 36%, as set out in GOV.UK’s inheritance tax guidance. One condition there: section 142(3A) says that where the redirected property becomes a gift to charity, section 142(1) does not apply at all unless the charity has been notified that the instrument exists.

Capital gains works the same way. Section 62(6) of the Taxation of Chargeable Gains Act 1992 says the variation is not a disposal by the beneficiary and applies as if the deceased had made it, on conditions mirroring the inheritance tax ones, so one document normally covers both.

When a Variation Saves Nothing

Often enough it saves nothing, and I would rather say so before anyone pays for a document. If the estate sits below the £325,000 threshold and is already clear of inheritance tax, a variation cannot reduce a bill that does not exist. It may still be worth doing so the money reaches the right person, but not for tax.

Redirect your share to somebody who is not exempt, an adult child for instance, and the estate’s bill does not move either, because nothing exempt has been created. You have kept that money out of your own estate for the future, which belongs in a conversation about inheritance tax planning rather than this one.

Then there are the ways the relief is lost outright. Section 142(3) removes it where the variation is made for consideration in money or money’s worth, so nobody can be paid to sign. Section 142(2) removes it where the instrument carries no statement, made by all the relevant persons, that they intend section 142(1) to apply, and IHTM35013 confirms HMRC will not accept one sent separately afterwards for anything executed since 1 August 2002. The two years remove it once they close, and a redirection made in month twenty-five is a gift from you, clock and all.

What HMRC Needs to See

HMRC set out its requirements in a letter to the Law Society in April 1985 and still publishes them at IHTM35021. The instrument has to:

• be in writing, and made by the people who benefit or would benefit under the original dispositions
• be made within two years of the death
• identify the dispositions being changed and redirect where they go
• carry the statement of intent, for anything executed on or after 1 August 2002
• reach HMRC within six months of execution where it results in more tax being payable, with a calculation of the extra attached

Where the variation does not change the tax due, GOV.UK says there is no need to send a copy at all.

Nothing in that list requires a deed. GOV.UK says so plainly: a letter qualifies, provided it meets the conditions. The name is convention rather than law. Form IOV2, HMRC’s instrument of variation checklist, is optional, and a sensible way to test the wording before anyone signs.

Disclaiming a Share Instead of Redirecting It

Families often ask about disclaiming instead, and a disclaimer and a variation are not the same thing. A variation redirects your share to a person you name. A disclaimer refuses it outright, and section 142(1) then treats the benefit as never having been conferred, so the share passes to whoever the will or the intestacy rules put next in line, which you do not choose. Both sit inside the same two years, and both have to be drafted properly, which brings us back to the money.

What It Costs, and Who Pays

Published prices are thin, because the cost turns on how many beneficiaries there are and how much tax work sits behind the document. The figure you will find quoted starts from around £350 plus VAT for a straightforward standalone variation.

The cost normally falls on the beneficiaries asking for the variation rather than on the estate, since the change is a voluntary one made by the people who benefit from it.

Timing moves the figure more than anything. Where the deed is drawn up during the administration, most of the work behind it is already done: the valuations exist, the beneficiaries are identified, the tax position has been calculated. That is why, where I am handling the full administration, preparing the deed is included in the £1,880 fixed fee with no separate charge, as the probate cost page sets out. A standalone deed is quoted separately.

You deal with me directly throughout. If a variation is something your family is considering, the two years are already running, so call me on 020 8669 1779 or leave your details and I will call you back.