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HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
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IHT implications of an Instrument of Variation: effect of not coming within s.142

A variation or disclaimer may not come within IHTA84/S142 (1), because, for example

  • there is extraneous consideration (IHTM35100)
  • there is insufficient link with the original disposition (IHTM35025), or
  • there is no valid election (IHTM35051) (for variations executed before 1 August 2002) or
  • there is no valid statement of intent (IHTM35058) (for variations effected on or after 1 August 2002)

Or a variation or disclaimer may be only partly within IHTA84/S142 (1), for example

  • where it also deals with property which is not part of the death estate (IHTM35071) for the purposes of IHTA84/S142 (1) or
  • where it purports to reduce the benefits of persons who are not parties to it (IHTM35045).

If a variation does not come within IHTA84/S142 (1), or to the extent to which one does not come within IHTA84/S142 (1), it operates for IHT purposes in the same way as any other transaction affecting an individual’s own property. It may be a transfer of value and will not be ‘written back’ into the will or other disposition for the purpose of tax on the death. As a transfer of value it will be either a PET (IHTM04057) or a transfer chargeable when made (IHTM04067) and will cumulate should the beneficiary making the instrument fail to survive for 7 years after the date of the instrument.

The above also applies to any disclaimer which is not within IHTA84/S142 (1), except that in the alternative a disclaimer of an interest in settled property may come within IHTA84/S93.