Whether the trust is a “life interest” or “discretionary” trust the transfer of the property will be a chargeable transfer for IHT and therefore IHT will arise at that time (subject to nil rate band).
If the transferor pays the IHT the value of the property will need to be grossed up; if the trustees are to pay the IHT then no grossing up is necessary.
Such liability is due for payment on 30 April of following tax year where transfer effected between 6 April and 30 September; otherwise settlement due 6 months after end of month in which transfer occurred.
Instalment option possible.
Form IHT 100.
Likely a reservation of benefit will arise.
No RNRB on settlor’s death.
No CGT on initial settlement as presumably private residence relief applies. In any event trust will be settlor interested and hence no hold-over available for CGT purposes on initial settlement.