Legacy fund

swimingly

My husband's father died Oct 2004 and my MiL did a DoV March 2005 on his estate to create a nil-rate legacy fund of £263,000. This was index-linked and was a debt to be secured by a charge over the property. The property is now worth about 500K and the fund approximately 380K. MiL died Aug 2017 and the house remains unsold to date. We have seen various professionals and are now confused about tax issues. Please could you tell me what charges would apply when the house is sold and the fund is released?
i.e. CGT, exit charge etc.

xylophone

We have seen various professionals and are now confused about tax issues.

Then they weren't professional enough?

https://pilot-portal.tax.org.uk/utilities/att/find-a-member

Do you mean that the DoV created a nil rate band discretionary trust?

The Trustees accepted an "IOU" for the amount, to be satisfied by the repayment of the debt (linked to RPI/House Price Index/something else)?

The index linking in itself creates a taxation issue.

https://uk.practicallaw.thomsonreuters.com/w-007-6723?transitionType=Default&contextData=(sc.Default)&firstPage=true&bhcp=1

swimingly

Yes the DoV created a nil rate band discretionary trust. It was a loan against the property (index linking/RPI).

xylophone

Yes the DoV created a nil rate band discretionary trust. It was a loan against the property (index linking/RPI).

Then the Trust will have tax to pay on the indexing. See link above and consult a CIOT member.

swimingly

At 45%? Ouch!