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HMRC internal manual

Inheritance Tax Manual

Who should make the instruments?: income between two deaths

Where an instrument of variation (IoV) by the beneficiaries of a dead beneficiary is accepted as within IHTA84/S142 (1), the taxpayer may occasionally ask for any income arising on the property concerned between the two deaths to also be treated as redirected.  The purpose is to increase the reduction in the second estate.  You should deal with such a request as follows

  • if the IoV specifically redirects the income, you should allow a deduction for the net amount of any such income included for IHT purposes in the second estate, but
  • if the IoV is silent about the income and deduction is requested, you should allow a deduction only if it is confirmed that the income was actually in the second estate and had not been spent or been the subject of another disposition.