Budget 2015: Deed of Variation Review 

A Review of the role of Deeds of Variation was announced in the March 2015 Budget speech.

In identifying Deeds of Variation as “tax avoidance” the Chancellor has focused on the potential tax consequences for those who undertake tax planning. There are many cases where variations are used simply to correct tax mistakes or use Inheritance Tax Business Property Relief and Agricultural Property Relief on death. They are also common where a widow or widower and other family members of the deceased simply want to make a change so that the estate can go to somebody else.

Without Deeds of Variation executors will have to resort to the Courts to address these very real issues. It is easy to anticipate that the Courts will become busier with “mistake” applications along the lines of the cases of Pitt v Holt and Futter v Futter, as well as with negligence claims against family solicitors if the Review recommended change.

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 will have huge implications for many estates and it is hoped that the Review will acknowledge this.