I assume the conditions of TCGA 1992 s 165 are still satisfied.
The trust would not appear to be a revertor to settlor trust (assuming on termination of the interest in possession the trust property does not have to revert to the settlor).
Trust and X’s death
If the shares remain in the trust, on X’s (ie the interest in possession beneficiary) death the held-over gain will fall subject to CGT but any gain arising whilst in trust is not subject to a CGT charge [TCGA 1992 s 74].
The held-over gain should be capable of further hold-over under TCGA 1992 s 260 or s 165.
Trust wound up
If the trust is wound up with the shares appointed back to X (who thus becomes absolutely entitled to the shares) no IHT arises [IHTA 1984 s 53(2)] but any gain arising (including the previous held-over gain) would be eligible for hold-over under TCGA 1992 s 165.
Then, on X’s subsequent death (X owning the shares absolutely), there would be an uplift for CGT purposes without any resultant CGT charge (ie all gains are effectively wiped out).
Malcolm Finney