Synopsis: Implications in the “popular press” that deeds of variation represent “dodgy” aggressive tax avoidance: they represent acceptable and useful planning opportunities but are no substitute for regularly reviewed will planning
Date posted: Monday, February 16, 2015
The Daily Mail on Friday carried the headline “RED ED THE TAX AVOIDER” (Daily Mail’s caps not mine!).
The story (one of many on the continuing hot topic of tax avoidance) focussed on a deed of variation executed following the death of the Labour leader’s dad in 1994.
It seems from the sketchy (forgive the pun) reporting that Ed’s dad left most of his estate to his widow. The Deed of Variation, it seems, transferred 40% of the value of a £300,000 property to Ed and David equally. The value will have fallen within, and thus used, the deceased’s nil rate band – at the time £150,000. The transferrable nil rate band wasn’t introduced until 2007.
All perfectly legitimate and specifically permitted by the legislation.
The story will have been seen and read by many and so this is to inform you and reassure clients that should the use of the deed of variation be necessary it will be perfectly acceptable (as the law stands) to do so.
Perhaps more relevant though is to encourage clients to regularly review their wills to ensure that they reflect their current wishes.
One will then not need to rely on a deed of variation. Soon after the deceased’s death is rarely a good time to discuss planning among beneficiaries and if it’s not done then the two year deadline may just slip by.
Why not talk to the professionals about properly managing your finances
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