Following a deed of variation entered into by the beneficiaries of a will or intestacy the resultant dispositions of assets are deemed to be those of the deceased, but what happens if a surviving joint tenant joins in the variation and gives up his or her share in the relevant asset?
The relevant legislation refers to “dispositions whether effected by will, under the law relating to intestacy or otherwise”. HM Revenue & Customs take the view that the words “or otherwise” have the effect of including in the variation rules the automatic inheritance of a deceased owner’s interest in a jointly held asset. It therefore follows that a variation by the surviving joint owner is not a transfer of value for inheritance tax purposes. Similar rules apply for capital gains tax purposes.