Deed of Variation Not Tax Avoidance

Deed of Variation Not Tax Avoidance.

You cannot tell the election campaign is on and newspapers and journalists, no doubt fed lines by opposite sides of the House of Commons politicians, are being given line after line of political dirt to try and smear the other.

The latest one involves various publications and online sites covering a story that Ed Milliband and brother indirectly committed tax avoidance by using a deed of variation Will when their father died.

The circumstances:

Ed Millband’s father died and left his share of a £300,000 marital home to his wife in 1994.

The inheritance tax threshold at the time was £150,000 and not transferrable between spouses as it is today.

In short, Mr Milliband (dec’d was using very little of his nil inheritance tax band) at death and this would then be lost.

Ed and his brother David then used the perfectly legal approach of using a “deed of variation” to amend the Will to leave 40% of Mr Milliband’s share of the house to his children.  This used up the balance of his nil rate band of £150,000.  Sound financial planning.

The papers are now suggesting this is tax evasion.  Utter tosh!

What the papers do not say is that this is strictly legal and anyone can vary a will provided all beneficiaries agree.

What the papers do not say is that if this share in a property is share in a second property and not Ed’s or David’s main home, they may be/would have been subject to capital when the property is/was sold.

Comment

We are not political animals and it is none of our business whether your politics are red, blue, yellow, purple or green.  What we do care about is people knowing that a deed of variation for tax planning or care fees asset protection is a legitimate, legal action.

For more on deeds of variation, watch our video: Deed of Variation explained.