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HMRC internal manual

Capital Gains Manual

Death and Personal Representatives: Non-retrospective variations: variation made: valuable consideration

The variation in the ultimate destination of the assets of the estate may be made for valuable consideration. This will occur when

  • a legatee enters into a contract to sell his or her entitlement under the will or intestacy
  • a legatee executes a deed of variation in return for valuable consideration


  • compromise terms varying the devolution of the estate are included in a `Tomlin’ order under which the plaintiffs agree to give up their right to take further Court action in return for the variation being made.

On a disposal of a future chose in action for valuable consideration the legatee should be treated as having made a disposal for Capital Gains Tax purposes on the date that the non-retrospective variation was effected. The legatee is contracting to deliver to the assignee the assets he or she will eventually receive from the estate. As there is a contractual arrangement TCGA92/S28 will apply to determine the date of the disposal. Therefore the disposal is deemed to occur on the date of the variation.

At the date of the variation we will not know what assets will eventually vest from the estate to the legatee for onward transmission to the assignee. We therefore cannot compute the Capital Gain arising. The gain can only be computed when the assets finally do vest. If there is likely to be any significant delay between the date of the variation and the date the assets will vest an estimated assessment should be raised on the legatee to protect HMRC’s interests.