Where a disabled person's trust is created for a 16-year old child by their parents, will holdover relief be available for capital gains tax purposes on the entry of assets into the trust? Will the trust be settlor-interested for income tax purposes given that the settlor's unmarried minor child will be the beneficiary of the trust?

We assume that the disabled child referred to qualifies as a disabled person under section 89(B)(2) of the Inheritance tax Act 1984 (IHTA 1984) and Schedule 1A to the Finance Act 2005 (FA 2005).

Where a parent wishes to settle property on trust for a disabled child and benefit from the favourable tax treatment under IHTA 1984, ss 89 or 89B(1)(c), they can establish a:

1. •

   discretionary disabled trust under which, during the life of the disabled person, no interest in possession in settled property subsists and which provides that (for trusts established on or after 8 April 2013) a maximum of £3,000 or 3% of the value of the trust fund can be paid to somebody other than the disabled person each year. Where these