Saving for a child: bare trust or Junior ISA

Q: When can the child get the money?

Junior ISA. GOV.UK says a child can take control of their Junior ISA at 16 but cannot withdraw money until they turn 18. HMRC's guidance for ISA managers says a child aged 16 or 17 can become the registered contact without the parent's consent. At 18 the account automatically becomes an adult ISA. The only early access is where a child is terminally ill, meaning not expected to live more than six months, with a time limit for the request that varies across the UK. Bare trust. GOV.UK says the beneficiary of a bare trust has the right to all the capital and income once they are 18 in England and Wales, or 16 in Scotland. Until then the trustees hold it. HMRC's manual at IHTM16068 notes that during a minority the trustees will usually have power under section 31 of the Trustee Act 1925 to use income for the child's maintenance, education or benefit, and must accumulate the rest. So a bare trust can pay for things like school trips before 18. A Junior ISA cannot. Neither route lets a parent hold back the money from an 18 year old. Families who want that need a different kind of trust, with different tax treatment.

Q: How much can go in, and who can pay?

Junior ISA. Anyone can pay in, but the total across the child's cash and stocks and shares Junior ISAs cannot exceed £9,000 for 2026 to 2027. A child can have one of each. A child cannot have a Junior ISA as well as a Child Trust Fund; the Child Trust Fund has to be transferred in first. HMRC's guidance says every subscription is a gift to the child and cannot be repaid to the person who made it. Bare trust. There is no statutory limit. The trustees can hold cash, shares, funds or property, and can receive a large one off sum such as an inheritance.

Q: How is the income taxed?

Junior ISA. GOV.UK says there is no tax on interest in a cash Junior ISA, or on capital growth or dividends in a stocks and shares Junior ISA. Nothing needs to be reported. Bare trust. HMRC's manual at TSEM1563 says the beneficiary of a bare trust is taxable on the trust income and gains. The child has their own Personal Allowance of £12,570 for 2026 to 2027, so modest income often carries no tax. If tax is due, or a repayment is claimed, the income goes on the child's return or a repayment claim. The trust's £500 tax free amount does not apply to bare trusts.

Q: How do they compare side by side?

PointJunior ISABare trust Limit for 2026 to 2027£9,000 in totalNone Child controlsRegistered contact from 16; withdrawals from 18Absolute right at 18 (16 in Scotland) Use before 18Only for terminal illnessTrustees can apply income for maintenance and education Income taxNoneChild's income; parent's if parental gift and over £100 GainsNoneChild's, with £3,000 annual exempt amount RegistrationNot a trustMay need registering if it holds investments

A Junior ISA is tax free and sits outside the parental settlement rule, but only £9,000 can go in for 2026 to 2027 and the child gets the money at 18. A bare trust has no limit and can hold any investment, but its income is taxed on the child, or on the parent if a parent provided the money and the income is more than £100 a year. The child can claim a bare trust at 18, or 16 in Scotland.

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When can the child get the money?

Junior ISA. GOV.UK says a child can take control of their Junior ISA at 16 but cannot withdraw money until they turn 18. HMRC’s guidance for ISA managers says a child aged 16 or 17 can become the registered contact without the parent’s consent. At 18 the account automatically becomes an adult ISA. The only early access is where a child is terminally ill, meaning not expected to live more than six months, with a time limit for the request that varies across the UK.

Bare trust. GOV.UK says the beneficiary of a bare trust has the right to all the capital and income once they are 18 in England and Wales, or 16 in Scotland. Until then the trustees hold it. HMRC’s manual at IHTM16068 notes that during a minority the trustees will usually have power under section 31 of the Trustee Act 1925 to use income for the child’s maintenance, education or benefit, and must accumulate the rest. So a bare trust can pay for things like school trips before 18. A Junior ISA cannot.

Neither route lets a parent hold back the money from an 18 year old. Families who want that need a different kind of trust, with different tax treatment.

How much can go in, and who can pay?

Junior ISA. Anyone can pay in, but the total across the child’s cash and stocks and shares Junior ISAs cannot exceed £9,000 for 2026 to 2027. A child can have one of each. A child cannot have a Junior ISA as well as a Child Trust Fund; the Child Trust Fund has to be transferred in first. HMRC’s guidance says every subscription is a gift to the child and cannot be repaid to the person who made it.
Bare trust. There is no statutory limit. The trustees can hold cash, shares, funds or property, and can receive a large one off sum such as an inheritance.

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How is the income taxed?

Junior ISA. GOV.UK says there is no tax on interest in a cash Junior ISA, or on capital growth or dividends in a stocks and shares Junior ISA. Nothing needs to be reported.

Bare trust. HMRC’s manual at TSEM1563 says the beneficiary of a bare trust is taxable on the trust income and gains. The child has their own Personal Allowance of £12,570 for 2026 to 2027, so modest income often carries no tax. If tax is due, or a repayment is claimed, the income goes on the child’s return or a repayment claim. The trust’s £500 tax free amount does not apply to bare trusts.

How does the parental settlement rule change things?

Section 629 of the Income Tax (Trading and Other Income) Act 2005 says income from a settlement made by a parent, if it is paid to or treated as income of their minor unmarried child, is taxed as the parent’s income. Section 629(3) disapplies it where that income is £100 or less in a tax year. HMRC’s manual at TSEM4310 says the £100 limit applies separately to each parent, and once it is exceeded all the income is taxed on the parent, not just the excess.

Bare trusts are caught. TSEM4300 says the rule applies to income of a bare trust set up by a parent whether or not it is paid out, because the income belongs to the child.
Junior ISAs are not. HMRC’s guidance for ISA managers says income from parental subscriptions to a Junior ISA does not count towards the parent’s income under section 629.
Gains are not caught. Section 629 applies to income. Under section 60 of the Taxation of Chargeable Gains Act 1992, gains on bare trust assets are the child’s, set against the child’s £3,000 annual exempt amount.
Grandparents and others are not parents. Money from grandparents, aunts or godparents is outside section 629, unless HMRC finds a reciprocal arrangement under which a parent is the real settlor. See bare trust or discretionary trust for grandchildren.

For parents, this is usually the deciding point. A bare trust funded by a parent works well for investments chosen for growth rather than income, or for gifts small enough to keep income under £100.

What about inheritance tax?

Both are gifts. HMRC’s ISA guidance says gifts by a parent to a Junior ISA are treated like any other gift for inheritance tax. IHTM16068 says a lifetime gift on trust for a minor absolutely is a potentially exempt transfer. Either way, the gift leaves the giver’s estate if they survive seven years, and the annual exemption of £3,000 and the exemption for regular gifts out of income can apply. See exempt gifts.

Which involves more paperwork?

A Junior ISA involves very little. The registered contact deals with the provider and there is no tax reporting. The Trust Registration Service manual at TRSM23160 says Junior ISAs and Child Trust Funds are not trusts and do not need registering.

A bare trust needs more care. TRSM23160 says there is no general exclusion for bare trusts. A trust created by opening a bank account for a minor is excluded, but a trust holding shares or funds for a child is not, so it may need registering. The child’s income also has to be tracked against the £100 limit, and against their allowances. See the Trust Registration Service.

How do they compare side by side?

Point	Junior ISA	Bare trust
Limit for 2026 to 2027	£9,000 in total	None
Child controls	Registered contact from 16; withdrawals from 18	Absolute right at 18 (16 in Scotland)
Use before 18	Only for terminal illness	Trustees can apply income for maintenance and education
Income tax	None	Child’s income; parent’s if parental gift and over £100
Gains	None	Child’s, with £3,000 annual exempt amount
Registration	Not a trust	May need registering if it holds investments

How might the numbers compare?

Illustration only. A mother has £20,000 to put aside for her 8 year old son, and expects interest of 4% a year.

All in a bare trust. Interest is £800 a year. That is over £100, so all £800 is taxed as the mother’s income. If she pays higher rate tax and has used her savings allowance, she pays £320.
£9,000 in a Junior ISA and £11,000 in a bare trust. The ISA’s £360 of interest is tax free. The trust earns £440, still over £100, so that is taxed on the mother. Next year a further £9,000 could go into the ISA, leaving £2,000 in the trust and £80 of trust interest, which is under the limit and taxed as the son’s.
Grandmother gives the £20,000 instead. The bare trust interest is the son’s own income, covered by his Personal Allowance.

What mistakes come up most often?

Treating the £100 limit as an allowance; once it is exceeded, all the income is the parent’s.
Paying in more than £9,000 across a child’s Junior ISAs in one tax year.
Assuming the parent can recover Junior ISA money if plans change; every subscription is a gift.
Forgetting that both a Junior ISA and a bare trust become the child’s at 18 to spend as they like. The Junior ISA and child savings guide covers the account rules in more detail.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.