Deed of Variation

[cjewsbury]

Hi - does anyone know if you do a deed of variation does this impact the deceased nil rate tax relief ? Our solicitor has not mentioned this but someone else did the other day and we cannot find any information on the internet around this. The suggestion is that the nil rate 325k reduces depending on how much the deed of variation is for. Any help on this would be great. thanks

[Peter D]

Yes it has a direct impact £ for £. Regards Peter

[IanDarkwater]

The true answer is perhaps. You haven't told us enough to be sure.

An Instrument of Variation (it's an Instrument NOT a deed) effectively changes the will for taxation purposes & it's often, but not always, used to reduce a tax liability.

If for example the IoV acts to re-direct a gift from a child to a spouse then it can reduce an immediate IHT liability & not change the deceased's nil rate band relief.

If, conversely the IoV acts to re-direct a gift from the spouse to a child it will reduce the deceased's nil rate band relief.

[cjewsbury]

thanks for the replies.
this Deed of Variation is being used to re-direct my deceased fathers half of the house to his children. So in this instance i assume there is an impact on his nil rate tax allowance £ for £ ?
Although you reduce the nil rate tax relief i guess you do protect the money from future growth which could take you over the IHT threshold ?
thanks