Guidance on LBTT Exemption for Will Variations Benefiting Different Property Beneficiaries

LBTT exemption for deeds of variation after death

A transfer of inherited property can be exempt from LBTT where a will or intestacy is changed within two years of death so that the property passes to a different beneficiary, provided the new beneficiary gives no compensation for receiving it. Compensation includes taking on a mortgage, but the exemption is not lost just because the original beneficiary receives another asset from the estate instead.

• The exemption applies to post-death changes to a will or intestacy, often made by a deed of variation.
• The change must be made within two years of the deceased’s death and result in a different beneficiary receiving the property.
• The new beneficiary must not pay money or give any other compensation for the property.
• Taking over liability for a mortgage on the property counts as compensation and can prevent the exemption.
• If the original beneficiary receives another estate asset instead, that does not by itself count as compensation from the new beneficiary.
• In practice, the key issue is whether the property is simply being redirected within the estate or whether the new beneficiary is effectively giving value for it.

Scroll down for the full analysis.

LBTT and deeds of variation: when changing who inherits property is exempt

This page explains a narrow but important LBTT exemption. It applies where, within two years of a person’s death, the terms of a will or intestacy are changed so that land or property passes to a different beneficiary. If the new beneficiary does not give any compensation for that change, the transaction is exempt from LBTT.

What this rule is about

Sometimes the people entitled under a will, or under the intestacy rules, agree to rearrange who should receive a property after the deceased has died. In practice, this is often done by a deed of variation or similar arrangement.

Ordinarily, a transfer of land can trigger LBTT if it is a land transaction for chargeable consideration. This exemption is aimed at post-death rearrangements where the property is simply redirected from the original beneficiary to someone else, rather than being bought by them.

The key policy point is that LBTT is not intended to apply where inheritance rights are being rearranged without the new recipient paying for the property.

What the official source says

The official guidance says the exemption applies where:

• the transaction changes the terms of a will or intestacy,
• the change is made within two years of the death, and
• as a result, a different beneficiary receives the property.

The exemption only applies if the new beneficiary does not make a compensation payment. The guidance makes clear that this includes taking on liability for a mortgage. So if the person receiving the property assumes mortgage debt as part of the arrangement, that counts against the exemption.

The guidance also makes an important distinction. A variation that benefits the original beneficiary does not count as a compensation payment. For example, if the original beneficiary gives up the property but receives some other asset instead under the rearrangement, that does not by itself prevent the exemption.

What this means in practice

The practical question is whether the new beneficiary is receiving the property as part of a family or estate rearrangement, or whether they are effectively giving value for it.

If the property is redirected to a different beneficiary within the two-year period and the new beneficiary gives nothing in return, the transfer can fall within the exemption.

If the new beneficiary pays money, gives some other form of compensation, or takes over a mortgage on the property, the exemption is not available on the terms described in the guidance.

This means conveyancers and taxpayers should look carefully at how the variation is structured. A common trap is to focus only on cash changing hands and overlook mortgage debt. The guidance expressly treats assumption of mortgage liability as compensation.

Another practical point is that not every rearrangement between beneficiaries is disqualified merely because someone else benefits. The guidance specifically says that giving the original beneficiary something else instead of the property does not count as compensation paid by the new beneficiary.

How to analyse it

A sensible way to approach this is to ask the following questions:

• Did the deceased die leaving a will, or does intestacy apply?
• Is the transaction changing the destination of the property under that will or intestacy?
• Is the change being made within two years of the death?
• Will a different beneficiary receive the property as a result?
• Is the new beneficiary giving any compensation for receiving the property?
• Does that compensation include taking on mortgage liability?
• Is the only “give and take” within the estate itself, such as the original beneficiary receiving some other asset instead?

The reference in the guidance to the chargeable consideration rules matters because the availability of the exemption turns on whether the new beneficiary is in substance giving value for the property.

Example

A dies leaving a house to B under a will. Within two years of A’s death, the family signs a variation so that the house passes instead to C. In return, B receives other estate assets. C does not pay B anything and does not take over any mortgage on the house. On the basis of the official guidance, the transfer of the house to C is exempt from LBTT.

Change the facts slightly. If C receives the house and, as part of the arrangement, takes over responsibility for an existing mortgage secured on it, the guidance treats that assumption of mortgage liability as compensation. In that case, the exemption would not apply on the basis described.

Why this can be difficult in practice

The main difficulty is identifying what counts as compensation from the new beneficiary. Cash is obvious, but debt assumption can be missed. The guidance expressly includes mortgage liability, so this must be checked carefully.

Another fact-sensitive point is separating a genuine variation of the deceased’s estate from a broader bargain between family members. The exemption is aimed at changing the terms of the will or intestacy so that a different beneficiary receives the property. If the arrangement goes beyond that and involves value moving from the new beneficiary, the position may change.

It is also important not to confuse two different ideas:

• the original beneficiary receiving something else from the estate, which the guidance says does not count as compensation from the new beneficiary, and
• the new beneficiary providing value, which can prevent the exemption.

That distinction can be easy to state but harder to apply where the estate arrangements are complex.

Key takeaways

• A post-death variation can be exempt from LBTT if it redirects property to a different beneficiary within two years of death.
• The exemption depends on the new beneficiary not giving compensation, and mortgage assumption counts as compensation.
• The original beneficiary receiving something else from the estate does not, by itself, stop the exemption.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Guidance on LBTT Exemption for Will Variations Benefiting Different Property Beneficiaries

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