A disclaimer is a flat refusal of a gift: the beneficiary steps aside and the property passes as if the gift had never been made, with no say over where it goes. A deed of variation lets the beneficiary choose the new recipient. Both can be read back to the date of death for inheritance tax and capital gains tax if made in writing within two years, but the conditions, the paperwork and the income tax results differ.

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What is the basic difference between disclaiming and varying?

Section 142 of the Inheritance Tax Act 1984 covers two separate acts. Under section 142(1)(a) the dispositions of an estate can be varied; under section 142(1)(b) the benefit conferred can be disclaimed. In both cases, if the instrument is in writing and made within two years of the death, the Act applies as if the variation had been made by the deceased or, for a disclaimer, as if the disclaimed benefit had never been conferred.

The practical difference is control. HMRC’s Inheritance Tax Manual at IHTM35161 says a disclaimer must be unconditional and the beneficiary cannot redirect the interest being disclaimed; the property falls back into residue and follows the will or intestacy from there. A variation, by contrast, rewrites who receives what. If you want a particular person to benefit, a disclaimer is the wrong tool unless the default destination happens to be that person. This page compares the two; the mechanics of a variation itself are covered in deeds of variation.

What conditions does each route have to meet?

Point Disclaimer Deed of variation
Form Must be in writing for IHT; a disclaimer by conduct does not qualify (IHTM35162) Instrument in writing
Time limit Two years from death Two years from death
Statement of intent Not needed (IHTM35162) Needed for IHT under section 142(2) and for CGT under TCGA 1992 section 62(7)
Benefit already taken Fatal: no disclaimer is possible once the gift or any benefit from it has been accepted Still possible, even after the asset has been distributed
Part of a single gift Not possible: the whole gift must go Possible
Choice of recipient None Full

Under IHTM35161 a beneficiary can still accept one gift in a will and disclaim another. HMRC’s example is a person left a £20,000 legacy and a third of residue, who may disclaim the legacy and keep the residue share. But someone left a £70,000 legacy cannot disclaim £10,000 of it, and a residuary beneficiary who accepts a £500 payment on account can no longer disclaim the residuary share.

Neither route works if it is made for consideration from outside the estate. Section 142(3) disapplies the relief where money or money’s worth is provided other than by another variation or disclaimer of the same estate. IHTM35100 notes that HMRC accepts a disclaimer or variation made to compromise a claim under the Inheritance (Provision for Family and Dependants) Act 1975 as not caught, unless the deceased died domiciled outside the UK.

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Where does disclaimed property actually go?

This is the question that catches people out. In England and Wales, section 33A of the Wills Act 1837 treats a person who disclaims a gift under a will as having died immediately before the testator, unless the will shows a contrary intention. For intestacy, section 46A of the Administration of Estates Act 1925 does the same for a share of the residuary estate.

That deemed death can trigger other rules. Under section 33 of the Wills Act 1837, a gift to a child or remoter descendant of the testator who dies first, leaving issue, passes to that issue unless the will says otherwise. So a son who disclaims a legacy hoping it will pass to his mother may instead find it goes to his own children. Where the gift is not saved by section 33, it normally falls into residue, and if residue itself is disclaimed there may be a partial intestacy. HMRC warns at IHTM35163 that interests are often disclaimed without regard to the partial intestacy produced, and that a document which tries to disclaim and then redirect is inconsistent with the concept of a disclaimer.

How do the inheritance tax effects compare?

Where the conditions are met, the inheritance tax result is the same in principle: the estate is taxed as if the deceased had left the property to whoever ends up with it. IHTM35162 confirms that, apart from the statement of intent and the penalties attached to it, HMRC applies its variation guidance at IHTM35011 to IHTM35154 to disclaimers as well. So if a disclaimed legacy falls into residue left to a surviving spouse, the spouse exemption can apply to it; if it falls to a nephew, it is chargeable.

Two procedural differences follow from the statute. First, only a variation that increases the tax needs the personal representatives to join in the statement (section 142(2A)) and requires a copy to be sent to HMRC with the additional tax figure within six months under section 218A. Second, a disclaimer of an interest in settled property, such as a life interest under an existing trust, is dealt with by section 93, which IHTM35165 notes has no time limit and also applies to lifetime trusts. A variation cannot be used on that kind of settled property in the same way.

How do the capital gains tax effects compare?

Section 62(6) of the Taxation of Chargeable Gains Act 1992 mirrors the inheritance tax rule: a variation or disclaimer in writing within two years is not a disposal, and the Act applies as if the deceased made the variation or the disclaimed benefit was never conferred. The new recipient therefore takes the probate value as their base cost, as explained in CGT on death and the base cost uplift.

Section 62(7) requires a statement of intent only for a variation. A valid disclaimer needs no statement. If either route fails, the result is a lifetime gift. HMRC’s Capital Gains Manual at CG31660 says a non qualifying variation of vested assets is dealt with like any other gift, so the original beneficiary makes a disposal at market value and may face a gain on any rise since death, as covered in gifts and market value for CGT.

Does income tax treat them differently?

Yes, and this is often the deciding factor. HMRC’s Trusts, Settlements and Estates Manual at TSEM1815 states that deeds of variation do not change the income tax position: there is no legislation making them retrospective for income tax, and the person who gave up the entitlement is treated as the settlor of any trust the deed creates. This is rarely a problem for adult recipients, but under section 629 of ITTOIA 2005 income arising under a settlement and paid to or for a minor child of the settlor is taxed as the settlor’s income (subject to a £100 annual de minimis), so a parent who redirects an inheritance to their own minor children can end up taxed on the income.

A disclaimer works differently. TSEM1840 says the person disclaiming is not a settlor, a true disclaimer has retrospective effect, and later trusts keep their original settlor. If the disclaimed property ends up with the disclaimant’s minor children, it reaches them from the deceased, not from the parent.

How might the choice play out?

Illustration only. Anna dies leaving £100,000 to her daughter Beth and residue to her husband. Beth is comfortably off and would rather the money stayed with her father.

  • Disclaimer: because Beth is Anna’s child, section 33 of the Wills Act 1837 would pass the legacy to Beth’s own children if she has any, unless the will shows a contrary intention. If she has none, the legacy falls into residue, passes to her father and becomes spouse exempt.
  • Variation: Beth redirects the legacy expressly to her father, includes the statements of intent, and the gift is treated as Anna’s. The outcome does not depend on the default rules.

If Beth wanted the money to go to her children instead, a disclaimer might deliver that result without her being treated as the settlor for income tax, whereas a variation in their favour would make her the settlor while they are minors.

What mistakes come up most often?

  • Disclaiming after taking a payment on account, using an asset, or receiving income from it. Under IHTM35161 that is acceptance and blocks a disclaimer.
  • Trying to disclaim part of a single gift, or disclaiming and then naming where it should go. That is a variation and needs a statement of intent.
  • Not checking who takes in default, including section 33 of the Wills Act 1837 and any partial intestacy, before signing.
  • Assuming a disclaimer by conduct counts. For IHT it must be in writing within two years.
  • For a beneficiary who has died, forgetting that IHTM35164 requires their personal representatives and beneficiaries to join in. See intestacy and inheritance tax for default shares where there is no will.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.