compensation and trusts

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if an individual has a serious injury such that they are awarded a significant compensation payout, is this payout taxable? Secondly, if the funds are transferred into trust with the individuals parents being trustees (and the individual is the settlor and beneficiary), is there a IHT charge for transferring into trust? I would have thought that as the individual was (i) the settlor and (ii) the beneficiary, as they are classed as vulnerable people in receipt of PIP, they would have no IHT to pay if they survive 7 years from date of transfer. If anyone can clarify if my thinking is muddled i would be grateful.

NB the trust deed states the trustees have total control over income and capital and can distribute to the beneficiary as they see fit.

[maths]

Has the trust already been set up?

If so was not professional advice taken?

Do you know if the trust has been set up when it was set up and is it a s89 trust?

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the trust has been set up already with sols setting up the trust and no tax advice sought at the time. only the compensation payment, i.e. cash, was settled into trust.

the trust deed doesn't specifically mention s89 or IHTA84

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edit: the trust was set up in May 2015 with the main transfer into trust taking place in September 2016

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Having done some research it would appear that:-

1. the trust is a bare trust
2. we need to register the beneficiary for self assessment (form SA1)
3. we need to register the trust (form 41G)
4. we need to register as a vulnerable person (form VPE1)
5. the beneficiary is taxed on any income generated
6. the trust is taxed on any capital gains
7. special tax treatment is given on calculating 5 and 6

have I missed anything?

[maths]

If the trust is a bare trust then the beneficiary is taxed on any income and on any capital gains. It is the beneficiary who owns the property/assets.

The trustee(s) is merely a nominee.

There are no special income tax/CGT treatments (such apply only to a s89 trust).