Most people assume that once someone dies, the distribution of their estate is fixed. Whatever the will says, however out of date it is, however obviously it fails to match what the family needs — that is that.
It is not that. For two years, the people who inherit can redirect what they were left, and the tax system will treat the result as though the deceased had written it that way from the start.
What section 142 actually does
The mechanism is unusual and worth stating precisely. Nothing rewrites the will. What happens is that the beneficiaries sign an instrument redirecting property they were entitled to, and HMRC's manual describes the consequence: where an instrument satisfies the conditions of section 142, the redirection is treated for inheritance tax purposes as if it had been made by the deceased.
That last phrase carries the entire benefit.
Without it, a beneficiary passing an inheritance to their own children is simply making a lifetime gift. It becomes a potentially exempt transfer, it sits under the seven-year rule, and if they die within seven years it comes back into their estate.
With it, the gift was never theirs to give. It went from the deceased to the final recipient, and the beneficiary's own seven-year clock never starts.
The conditions
| Condition | Detail |
|---|---|
| Time | Made within two years after the death |
| Who | Made by the persons who benefit, or would benefit, under the dispositions |
| Content | Must clearly indicate which dispositions are varied and vary their destination |
| Statement of intent | Required for instruments executed on or after 1 August 2002 |
| No outside consideration | Section 142(3) disapplies the relief where consideration in money or money's worth comes from outside the death estate |
HMRC publishes form IOV1 as a checklist for establishing whether an instrument meets the conditions. It is worth working through even when a solicitor has drafted the document.
What it gets used for
Skipping a generation. A sixty-year-old inherits from a parent, does not need the money, and their own estate is already over the threshold. Redirecting to their children takes the asset out of a second round of inheritance tax without starting a seven-year clock.
Fixing an intestacy. Where there is no will, the statutory order decides — and as the intestacy rules show, the result is often not what anyone would have chosen. A variation lets the family redistribute to something sensible.
Using the spouse exemption. Property redirected to a surviving spouse or civil partner becomes exempt, which can remove a tax charge entirely on a first death.
Reaching the 10% charity threshold. This is the one most worth knowing. An estate that left 7% to charity can be brought to 10% by variation, dropping the rate on the whole component from 40% to 36%. Because of the cliff edge in the reduced rate, the beneficiaries who sign away part of their share can end up with more money than before — the tax saving exceeds what they give up.
Correcting a stale will. A will written before grandchildren existed, before a second marriage, before a house was sold.
The consideration trap
Section 142(3) is where informal family arrangements come apart.
If the variation is made for consideration in money or money's worth not provided out of the death estate, section 142(1) does not apply. HMRC's stated purpose is to stop the spouse, civil partner or charity exemption being effectively purchased for the benefit of non-exempt beneficiaries.
The practical shape of the problem: one beneficiary agrees to redirect their share, and another privately pays them something for doing it. That private payment — coming from outside the estate rather than from it — takes the whole variation outside section 142.
There is one carve-out in the statute: consideration consisting of another qualifying variation or disclaimer. Beneficiaries swapping entitlements between themselves as part of the same arrangement is contemplated by the legislation. Cash from someone's own pocket is not.
What it does not do
It is worth being clear about the limits, because "you can change the will" oversells it.
- It does not change the will. The legal history stands. Section 142 creates a fiction for tax, and the fiction is bounded.
- It does not bind people who did not sign. A beneficiary can only redirect their own entitlement.
- It is not automatic for capital gains tax. CGT has its own separate provision with its own requirements, and an instrument can be effective for one tax and not the other.
- It does not exist in a vacuum. Redirecting an inheritance can affect means-tested benefits and care funding assessments, and those regimes ask their own questions about deliberate deprivation. That is a conversation to have before signing, not after.
What to actually check
- When did the death occur? Count forward two years. If that date is close, this becomes urgent rather than theoretical.
- Who actually needs to sign? Only those giving something up — but everyone giving something up.
- Does the document contain a statement of intent? Without it the relief does not apply, however sensible the redirection.
- Is anyone being paid, in any form, to agree? If the money comes from outside the estate, section 142(3) removes the relief.
- Would adding a charitable gift cross the 10% line? Run the arithmetic before assuming it costs the family anything — it may not.
- Are benefits or care funding in play for anyone involved? Check before, not after.
What is described here is the mechanism, not a recommendation about any particular estate. A variation reaches into capital gains tax, stamp duty, means-tested support, and the position of any beneficiary who is a minor or lacks capacity — none of which a general article can weigh for you. Have a solicitor draft it, and start early: the two-year window is the one deadline in this area that nothing reopens.
Sources
- HMRC IHTM35011 — Instruments of variation: introduction (opens in a new tab)
- HMRC IHTM35021 — Instruments of variation: guidelines (opens in a new tab)
- HMRC IHTM35031 — Form IOV1: introduction (opens in a new tab)
- HMRC IHTM35100 — Consideration brought in from outside the estate (opens in a new tab)
- HMRC IHTM35151 — IHT implications of an instrument of variation: effect of coming within s.142 (opens in a new tab)
- Inheritance Tax Act 1984, section 142 (opens in a new tab)
This article is general information for a United Kingdom audience and describes the inheritance tax rules of England and Wales. It is not financial, tax or legal advice. Whether an instrument satisfies section 142 depends on its exact terms and on the circumstances of the estate. Take advice from a solicitor before varying an inheritance. Last reviewed 23 September 2026.
