Deed of Variation & SDLT

The life tenant and the remaindermen intend to vary the terms of a Will so that a number of the deceased’s properties can be transferred into a newly created limited company in which they will be the shareholders.

Usually there is no SDLT to pay on the transfer of properties to beneficiaries after a death. This is also true after a variation as long as there is no consideration (other than another variation) and the transaction takes place within two years of the date of death.

Does it make a difference to the SDLT analysis that instead of the variation being in favour of an individual, in this case it would be in favour of a limited company?

Steve Carter
Setfords Solicitors

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See the thread in February under the heading ‘SDLT on transferring inherited property to a company’

Ray Magill

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There was a lengthy thread on this subject which ended in February 2016. The heading was ‘SDLT and transferring inherited property to a company’. If you can’t trace it, I would be happy to send my record of it as a Word document.

Ray Magill


I still can’t find the thread you refer to under the heading ‘SDLT on transferring inherited property to a company’ would you be able to forward me your word document. Thanks in advance.

Caroline Fleet

Dear Ray, I have just come across this post and I cannot trace the thread you mention. I would be grateful, if you still have it, to receive a copy of your work document.

Stephanie Court

Hi Ray,

Are you able to send me a copy? thanks

Lucy Orrow
Lambert Chapman LLP

I’m unable to locate Ray’s reference.

Companies are able to benefit from a Deed of Variation and FA 2003 Sch 3 para 4 exempts SDLT from applying to Variations subject to satisfying s142 IHTA 1984.

Malcolm Finney

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Thank you Malcolm,

My concern is that the beneficiaries will receive Ltd Co shares in return for the DOV, so are they still receiving something of value? I appreciate there are accounting principles in play here too.

Lucy Orrow
Lambert Chapman LLP

The beneficiaries are executing a DoV re-directing their inheritance to a company which they set up prior to executing the DoV (or included in the DoV). This is no different to a redirection into a trust set up prior to the DoV execution or within the DoV itself.

None of the s142 conditions are violated.

In addition no reservation of benefit issues arise as the beneficiaries are not treated as making the redirection/gifts under s142.

Malcolm Finney

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Surely, the beneficiaries will already be shareholders in the company before the variation is made, so they will not be receiving them in return for making the variation (which, yes, would likely be “consideration” for the purposes of s.142(3) IHTA 1984)

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals

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One thing to consider is that there is no increase in the base cost of the shares by virtue of the DoV. So there is an immediate unrealised gain on the shares once the variation is made. But I do not think this is regarded as consideration for the purposes of s142(3).

Malcolm Gunn

M B Gunn & Co Ltd