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HMRC internal manual

Inheritance Tax Manual

The settlement: discretionary trusts set up by IOV (S142)

Where a discretionary trust is set up under an instrument of variation, the trust is treated for inheritance tax purposes

  • as having commenced at the date of death, and
  • the deceased is treated as the settlor.

See the IOV guidance from IHTM35131

Follow the Lit1 procedures in notifying HMRC Trusts of the existence of the trust when appropriate. Note that for IT and CGT purposes the settlor is the person making the variation (rather than the deceased) and the date of commencement is the date of the variation. This may also be relevant if you are searching the Trusts database for a record of the trust. (IHTM42641)