Investment bonds are frequently held in a discounted gift trust (DGT), with the settlor’s carved out entitlement often being equal to the maximum permitted “tax free(!)” annual withdrawal from such bonds.
Provided that the cumulative withdrawal is not exceeded, I would not envisage the DGT needing to be registered until the IHT charge arises on the 10th anniversary. However, if there is any extra withdrawal (say, to pay school fees) which causes the cumulative limit to be exceeded, do the trustees need to register at that stage? Although the trustees hold the bond, I understand the chargeable event is taxable on the settlor, not the trustees, which would seem to exclude the trust from registration.
If this is the correct analysis for a DGT holding UK investment bonds, does it apply equally to those holding offshore bonds?