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HMRC internal manual

Inheritance Tax Manual

Settled property: charges on trusts for disabled persons

Property (IHTM04030) transferred into trust after 9 March 1981 which is held on discretionary trusts primarily for the benefit of a disabled personis treated for the purposes of IHT as if the disabled person had an interest in possession (IHTM16000) (IIP) in the property, IHTA84/S89.

Distributions out of such property to the disabled person are not taxable, but a charge to IHT will arise on their death and the trust fund will form part of their estate. (IHTM04029)