CGT holdover relief on transfer out of settlor interested trust

X made a self-settled life interest trust in 1999 to take advantage of CGT retirement relief, and part of the gain was held over. The original shares are still held in the trust and it is still an unquoted trading company.

If the trust is wound up and the shares transferred back to X, is there any reason why we can’t hold over the gain again (including the previously held over gain) under s 165 TCGA? I can’t see anything in the legislation preventing it but also can’t find any commentary confirming that it is possible, so am worried about missing something.

Also, if we can hold over the gain, what happens to the gain, including the previously held-over gain, on X’s death? If the shares remain in trust, that previously held-over gain would become chargeable on X’s death (although it should still be possible to hold it over again).

Diana Smart
Gordons LLP