Using Deeds of Variation to reduce Inheritance Tax

7th Aug 2025

Author: Benjamin Davenport-Lawton

Succession planning advice during your lifetime is always recommended. However, we understand that this does not always happen, and in some cases, the opportunity for planning is missed until after a person has died.

When someone passes away the beneficiaries can, within two years of the date of death, enter into a Deed of Variation to legally redirect part or all of their inheritance. This is often used to reduce the future inheritance tax burden or to realign the distribution of assets more appropriately between generations.

In a recent case, a farming client died leaving all of their assets, including their interest in the Farming Partnership, to their spouse. At the time of making the Will, this may have seemed tax efficient. However, under proposed changes to the inheritance tax rules due to take effect from 6 April 2026, both Agricultural Property Relief and Business Relief will be capped at £1 million per person.

On the death of the surviving spouse, the combined estate would exceed this threshold. Even with available reliefs, the surviving spouse’s estate would face a significant inheritance tax bill.

Following legal advice, the surviving spouse is now considering a Deed of Variation to redirect part of the inheritance to their children, who are already active Partners in the business. This ensures the spouse’s own estate remains below the threshold, while passing assets to the next generation in a tax-efficient way.

How can Butcher & Barlow help?

If you are administering an Estate and are unsure whether a Deed of Variation may be appropriate, we strongly recommend speaking to one of our specialist Solicitors in the Wills, Trusts & Estates Team. A well-timed conversation could make all the difference to the long-term future of your family’s farm.

This blog was first published in the Farmart Experts column of the June 25 edition of The Farmart magazine written by Benjamin Davenport-Lawton. Ben can be contacted on 01928 576 056 or emailed at blawton@butcher-barlow.co.uk.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The information in this article was correct at the time of publication. The information is for general guidance only. Laws and regulations may change, and the applicability of legal principles can vary based on individual circumstances. Therefore, this content should not be construed as legal advice. We recommend that you consult with a qualified legal professional to obtain advice tailored to your specific situation. For personalised guidance, please contact us directly.