IHT and variation


Wife died in Jan 2017 leaving half share of property held as tenants in common to children. Estate came in just under Nil rate band.

Within 2 years a deed of variation was used to redirect the half share of house away from the children to the surviving spouse.

No variation was send to HMRC as the transfer did not increase IHT due to spouse exemption. Is this correct?

Is it also correct to assume that now the Husband has died he now has his NRB, can claim transferable NRB, Residential NRB and transferable RNRB giving up to £1 mill allowance before IHT due?

Would HMRC view the original variation in this respect as tax avoidance?

Thanks for any insight.


The Variation is only required to be submitted to HMRC if the consequence of the DoV results in an increase in the IHT on the death [IHTA 1984 s 218A].

The surviving husband is entitled to an RNRB/TRNRB and NRB/TNRB.

No tax avoidance.

Malcolm Finney

1 Like

Thanks Malcom. Much appreciated.

If I may, I omitted the fact that the husband left his estate to the children when he subsequently died. Would this change HMRC’s tax avoidance interpretation as they ultimately inherited the asset that was redirected under the variation?

I do not consider that what the husband’s Will did with the share of the property, which was redirected to him, would in any way affect position as regards transferable bands etc.

Patrick Moroney

I don’t believe this alters anything. There wasn’t any overarching masterplan which involved any artificial steps; just standard tax planning.

Malcolm Finney