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.
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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