Preheat oven to 180°C / 350°F (160°C fan). Grease the baking dish generously with butter. Spread softened butter on one side of each bread slice. Cut slices diagonally into triangles or into rectangles.
Arrange first layer of bread in the dish, buttered-side up, overlapping slightly. Scatter half the sultanas (if using) over this layer. Add second layer of bread, buttered-side up, and scatter remaining sultanas over the top.
Warm milk and double cream in a saucepan over low-medium heat until steaming and just showing tiny bubbles around the edges. Do not boil.
In a large bowl, whisk eggs, caster sugar, and salt until pale and slightly thickened, about 1-2 minutes. Add vanilla and nutmeg and whisk briefly.
Slowly pour the hot cream mixture into the egg mixture in a thin, steady stream while whisking constantly to temper the eggs and prevent scrambling.
Strain the custard through a fine mesh sieve into a clean jug or bowl to remove any egg threads.
Slowly pour the strained custard evenly over the arranged bread. Press bread down gently with a spoon to help absorption. Cover loosely with cling film and soak for 20-30 minutes (up to 45 minutes for best results).
Remove cling film and sprinkle demerara sugar and extra nutmeg evenly over the surface. Place baking dish in a deep roasting pan and add boiling water to come 2-3 cm / 1 inch up the side.
Bake for 35-45 minutes until golden brown and puffed, with just a slight wobble in the centre. Cover loosely with foil if browning too quickly. Let rest for 10 minutes before serving.