Deed of Variation Template Walkthrough: The Clauses and Statements You Must Include
A deed of variation must do five things to actually work: name the right parties, recite the original gift, state the new gift, confirm no money changed hands, and include the two statutory statements that "read" the change back to the date of death — the s.142(1) IHTA 1984 statement for Inheritance Tax and the s.62(6) TCGA 1992 statement for Capital Gains Tax. Miss the statements and HMRC simply treats the variation as your own lifetime gift, undoing the whole point. Below I walk through each clause, fill a real template to redirect a £60,000 legacy, and explain exactly when you must send the deed to HMRC.
What a deed of variation does (and the two-year clock)
A deed of variation (also called an instrument of variation, or a deed of family arrangement) lets a beneficiary give up or redirect what they inherited — to another person, to a trust, or to charity — and have it treated, for tax purposes, as though the deceased had left it that way. You can vary a will, or the intestacy rules where there was no will.
The hard deadline is set by statute: the variation must be made within two years of the death. GOV.UK states it plainly — "any changes to the will must be completed within 2 years of the death" (gov.uk/alter-a-will-after-a-death). That window cannot be extended by HMRC or the courts, so a deed signed on day 731 gets no tax read-back at all.
Only the people who give something up need to agree. As GOV.UK puts it, changes need consent from "any beneficiaries left worse off by the changes." If you are gifting away your own share, you may be the only signatory. A beneficiary who is unaffected does not need to sign.
Without the statutory statements, the redirected money is simply your own gift to the new beneficiary. That brings it inside the seven-year potentially-exempt-transfer rules, and it never gets the IHT or CGT treatment of having come from the estate. The statements are what convert "I gave my inheritance away" into "the deceased left it to them." For instruments executed after 31 July 2002, that statement must sit inside the deed itself — you can no longer send a separate election to HMRC.
The essential clauses, one by one
Whatever template you use, a workable deed of variation contains these building blocks. The labels vary between precedents; the substance does not.
1. The parties
Name every person whose entitlement changes. At minimum that is the original beneficiary (the person giving something up) and the new beneficiary (who receives it). It is good practice to also note the personal representatives (executors or administrators). The personal representatives only have to join in if the variation increases the IHT due — then their signature confirms they accept the added liability.
2. The original disposition (recital)
Recite the facts: who died, the date of death, whether there was a will (with its date) or an intestacy, that probate or letters of administration were granted, and exactly what the original beneficiary was entitled to. This is the "before" picture. Be specific — "the legacy of £60,000 given by clause 4 of the Will" is far better than "my share."
3. The variation itself (operative clause)
This is the active heart of the deed: "the [original beneficiary] varies the disposition so that [the asset] shall instead pass to [the new beneficiary]." State the asset, the amount, and the new destination precisely. If you are redirecting into a trust, the trust terms go here or in a schedule.
4. Consideration
Confirm that the variation is made for no consideration in money or money's worth — except where the only consideration is another variation of the same estate. This is a hard condition: if the new beneficiary pays the original beneficiary for the redirection, the read-back is lost. A standard clause reads: "This variation is made without any consideration in money or money's worth other than the variation of dispositions of the estate of the deceased."
5. The two statutory statements
These are non-negotiable if you want the tax effect. Cover both taxes in one combined statement. HMRC's own checklist (form IOV2) is designed to confirm a variation "would meet the requirements of the Inheritance Tax Act and the Taxation of Chargeable Gains Act." A widely used combined form of words is:
"The parties to this variation intend that the provisions of section 142(1) of the Inheritance Tax Act 1984 and section 62(6) of the Taxation of Chargeable Gains Act 1992 shall apply to this variation."
Include the IHT statement (s.142(1)) where you want the change read back for Inheritance Tax. Include the CGT statement (s.62(6)) where the asset being redirected could carry a gain — shares, property, anything other than cash. For a pure cash legacy there is no chargeable gain, so the CGT statement does nothing useful, but it does no harm to include it, and most practitioners use the combined wording as standard.
| Clause | Purpose | If you leave it out… |
|---|---|---|
| Parties | Identifies who consents to the change | The deed may not bind the right people |
| Original disposition | Records the gift being varied | Ambiguity about what is being redirected |
| The variation | States the new destination of the asset | No operative change — the deed does nothing |
| Consideration | Confirms no money changed hands | Read-back lost; treated as a sale/lifetime gift |
| s.142(1) IHTA statement | Reads the change back for IHT | Treated as your own gift (7-year PET clock) |
| s.62(6) TCGA statement | Reads the change back for CGT | You may be treated as disposing of the asset |
Worked example: redirecting a £60,000 cash legacy
The facts. Margaret Fairbanks died on 12 March 2026, leaving a valid will dated 2019. Clause 4 of her will gives a legacy of £60,000 to her son, James Fairbanks. James is comfortable financially and would rather the money went to his daughter, Sophie Fairbanks, who is saving for a first home. James decides to vary the legacy so that the £60,000 passes to Sophie instead.
Step 1 — check the deadline. Death was 12 March 2026. The deed must be signed by 11 March 2028. James signs in June 2026 — comfortably inside the two-year window.
Step 2 — identify the parties. James is the original beneficiary (giving up £60,000). Sophie is the new beneficiary. The executors are named but do not need to sign, because cash going from son to granddaughter does not change the total IHT on Margaret's estate.
Step 3 — recite the original disposition. "Under clause 4 of the Will dated [2019], the Deceased gave a pecuniary legacy of £60,000 to James Fairbanks."
Step 4 — draft the variation. "James Fairbanks hereby varies the said disposition so that the legacy of £60,000 shall instead be paid to Sophie Fairbanks absolutely."
Step 5 — add the consideration and statements clauses. Confirm no money changed hands, then add the combined s.142(1)/s.62(6) statement above.
Step 6 — the tax outcome. Because s.142(1) IHTA 1984 is invoked, the £60,000 is treated for IHT as though Margaret left it to Sophie directly. It is not a gift from James, so it never enters James's own seven-year gift history — if James were to die within seven years, this £60,000 is ignored in his estate. There is no Capital Gains Tax point at all, because cash is not a chargeable asset (the s.62(6) statement simply has nothing to bite on). And critically: the redirection does not change the total Inheritance Tax due on Margaret's estate — £60,000 to a son or £60,000 to a granddaughter is the same number for IHT. So under the GOV.UK rule, "you do not need to send a copy to HMRC if the variation does not change the amount of Inheritance Tax due."
A filled skeleton (cash-legacy version)
Here is the operative spine of the deed, populated with the example figures. It is illustrative — a real deed should be settled by a solicitor.
THIS DEED OF VARIATION is made on [date] by James Fairbanks ("the Original Beneficiary").
WHEREAS Margaret Fairbanks ("the Deceased") died on 12 March 2026 having made a Will dated [2019]; probate was granted on [date]; and under clause 4 of the Will the Deceased gave a legacy of £60,000 to the Original Beneficiary.
NOW THIS DEED WITNESSES:
1. The Original Beneficiary varies the said disposition so that the legacy of £60,000 shall instead pass to Sophie Fairbanks absolutely.
2. This variation is made without any consideration in money or money's worth other than the variation of dispositions of the estate of the Deceased.
3. The parties intend that section 142(1) of the Inheritance Tax Act 1984 and section 62(6) of the Taxation of Chargeable Gains Act 1992 shall apply to this variation.
EXECUTED AS A DEED by James Fairbanks in the presence of [witness name, address, signature].
Witnessing — and do you need a solicitor?
To be a deed, the document must be signed by the person making it and that signature must be witnessed by someone who is present and who also signs. A deed therefore needs at least one independent witness (not the new beneficiary). Strictly, a variation does not have to be a deed at all — GOV.UK confirms "you do not need a formal document or deed — you can write a letter as long as it meets these conditions." But a properly witnessed deed is the clean, evidenced route and is what most practitioners use, because it puts execution and intention beyond doubt.
You are not legally required to use a solicitor for a straightforward cash redirection like the example above. A solicitor (or a STEP-qualified practitioner) is strongly advisable when: the asset is property or shares (CGT and valuation come into play); the variation creates or feeds a trust; a beneficiary lacks mental capacity or is a minor (court approval may be needed); or the change increases the IHT bill. The cost of getting the statements or the consideration clause wrong — losing the read-back entirely — usually dwarfs the fee.
Sending the deed to HMRC
You only have to tell HMRC when the variation increases the tax. GOV.UK is explicit: "if the variation means there's more Inheritance Tax to pay, you must send a copy to HM Revenue and Customs (HMRC) within 6 months of making it." Equally: "you do not need to send a copy to HMRC if the variation does not change the amount of Inheritance Tax due."
So in the Fairbanks example, nothing is sent — the IHT is unchanged. But if, say, a legacy were redirected away from a charity (which is exempt) to an individual (which is not), the estate's IHT would rise, and the deed plus any extra tax must reach HMRC within six months of the deed's date. The IOV2 checklist is a useful self-check before you send: it walks through whether the variation meets the IHTA and TCGA conditions.
| Situation | Send deed to HMRC? | Deadline |
|---|---|---|
| Variation does not change the IHT due | No | — |
| Variation increases the IHT due | Yes — with the extra tax | Within 6 months of making the deed |
| Variation reduces the IHT (e.g. gift to charity) | Recommended, to claim the lower tax | Send with the IHT account / claim |
For deaths in the current frozen-threshold period, the nil-rate band is £325,000 and the standard Inheritance Tax rate is 40% on the value above any available thresholds (gov.uk/inheritance-tax). A residence nil-rate band of up to £175,000 can lift the threshold to £500,000 where a home is left to children or grandchildren (gov.uk residence nil-rate band). A reduced 36% rate applies where 10% or more of the net estate is left to charity — a result a deed of variation can be used to engineer after death. Always confirm the figure for the relevant tax year on GOV.UK.
- Two-year hard deadline. The variation must be made within two years of death — no extensions.
- Six clauses. Parties, original disposition, the variation, consideration, and the two statutory statements.
- The statements are everything. s.142(1) IHTA 1984 reads the change back for IHT; s.62(6) TCGA 1992 does the same for CGT. Without them it is just your own gift.
- No consideration. If money or money's worth passes for the redirection, the read-back is lost.
- Witness it. A deed needs an independent witness; the new beneficiary should not witness.
- Tell HMRC only if tax rises. Send the deed (and the extra IHT) within six months when the variation increases the IHT due; no need to send it when the IHT is unchanged.
Frequently asked questions
Do I have to use a deed, or will a letter do?
GOV.UK confirms you do not strictly need a formal deed — "you can write a letter as long as it meets these conditions." But the document must still satisfy all the requirements, including the statutory statements and the no-consideration rule. Most practitioners use a properly witnessed deed because it puts execution and intention beyond argument. See gov.uk/alter-a-will-after-a-death.
What exactly are the two statutory statements?
One statement that the parties intend section 142(1) of the Inheritance Tax Act 1984 to apply (the IHT read-back), and one that section 62(6) of the Taxation of Chargeable Gains Act 1992 is to apply (the CGT read-back). For instruments executed after 31 July 2002 they must be in the deed itself — a separate election to HMRC is no longer accepted. A combined sentence covering both is standard.
Can I redirect to anyone, or only family?
You can redirect to any person, to a trust, or to charity — the new beneficiary does not have to be related to you or named in the original will. The read-back simply treats the deceased as having made that gift. Redirecting to charity can even reduce the estate's IHT, potentially down to the 36% reduced rate if 10%+ of the net estate goes to charity.
Does the £60,000 count as a gift from me for my own seven-year clock?
No — that is the whole point of the s.142(1) statement. The redirected amount is treated as passing under the deceased's will, not as a lifetime gift from you, so it does not enter your own seven-year potentially-exempt-transfer history. Without the statement, it would.
When must the deed go to HMRC?
Only if the variation increases the Inheritance Tax. GOV.UK: "if the variation means there's more Inheritance Tax to pay, you must send a copy to HMRC within 6 months of making it." If the variation does not change the IHT due, you do not need to send it.
Can a deed of variation be undone or done twice on the same gift?
No. Once made, a variation is effective and cannot be revoked. And you cannot vary the same asset more than once to get a different tax result — s.142 does not apply to a second variation of an item already redirected. Get it right the first time, which is why settling the wording with a professional is wise.
Get the free deed of variation checklist
A one-page checklist of every clause and statement your deed must contain — the same one I use before a deed is signed.
You're on the list — we'll be in touch.