Disclaiming a gift

Produced by a Tolley Trusts and Inheritance Tax expert

Trusts and Inheritance Tax

Guidance

This guidance note explains the inheritance tax treatment of a disclaimer and then considers the consequences of a disclaimer in relation to capital gains tax, income tax and stamp taxes. It also considers disclaimers in the context of an interest in settled property.

The general law and disclaimers

If a beneficiary of a gift under a Will or intestacy refuses it before acceptance, this amounts to a disclaimer. The property then devolves to the person(s) next entitled according to the terms of the Will or intestacy and so, unlike a variation, it is not possible for the person disclaiming to redirect the property or control its ultimate destination.

An effective disclaimer operates as an avoidance of a gift rather than as a disposition which re-directs the subject matter to someone else. The effect of a disclaimer is to treat the beneficiary as having pre-deceased the testator. Before disclaiming, it is important to find out what the effect will be. As a general rule, if a specific gift or legacy in a Will is disclaimed,

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