IHTM35154 | 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 statement of intent (IHTM35058) (for variations effected on or after 1 August 2002) or

• there is no valid election (IHTM35051) (for variations executed before 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 it 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 potentially exempt transfer (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.