A Review of the role of Deeds of Variation was announced in the March 2015 Budget speech.
Deeds of Variation have been with us for generations. They assist with the straightforward and efficient administration of estates, acting as ‘oil in the machine.’ Altering the legislation in the Inheritance Act and Capital Gains Tax Act would have had huge implications for many estates and it is comforting that Review acknowledges this. The government announced in the Autumn Statement that they have decided not to introduce any restrictions on the use of variations for tax purposes but will keep their use under review. See an earlier post regarding the potential implications had the legislation had been amended – http://goo.gl/4SXum2.
This is certainly a practical decision and is extremely good news for families who need to use deeds of variation for a wide variety of reasons. The original announcement of a review appeared to originate more from political expediency rather than with any concern over specific misuse. Variations are widely used for family rather than tax reasons – the clue lies in the term ‘deeds of family arrangement’ – and it is helpful that variations will continue to receive beneficial tax treatment.
My post on recent developments in this area back in June is now well worth revisiting – http://goo.gl/adsM4M