Budget 2015 – Deeds of Variation
The chancellor's promise of a crackdown on inheritance tax avoidance, highlighting 'deeds of variation' has worried accountants and financial planners.
Announcing a string of anti-tax avoidance measures aimed at raising £3.1 billion, George Osborne said he would review the use of deeds of variation to amend the terms of a Will after a person has died and that the review would report by the autumn.
David Kilshaw, head of private client tax at accountants Ernst & Young, had concerns about the review. 'Deeds of variation are not just tax planning vehicles. They can ensure estates pass as families wish where there is no Will or where circumstances have changed. When somebody dies without a Will, for example, a deed of variation may ensure a widow/widower can stay in their home.
He added: 'Over two thirds of people don’t have a Will. A deed of variation can be a lifeline for their heirs and it’s vital that any anti-avoidance measures don’t remove this.' Dermot Callinan, tax partner at KPMG, agreed, pointing out that deeds of variation were a long-standing measure in tax planning used to correct mistakes.
'It is a shame that something that has been around for generations to enable the straightforward handling of estates between families has been questioned as a mechanism for tax avoidance,' he said.