Bare Trust Account
Hold investments in trust for a child's future
Important information - The value of tax savings will depend on your and the child's circumstances and tax rules can change over time. Investments can go down in value as well as up, so the child might get back less than you invest. Due to the legal and tax implications associated with creating a trust, we recommend you consider taking financial, legal and tax advice on the suitability of a bare trust for your circumstances before opening an account with Hargreaves Lansdown. You must make sure that creating a bare trust is appropriate for your circumstances. Information provided based on our understanding of applicable rules as at 28 June 2024.
Give little ones a head start
There are many advantages to putting money away for a child while they’re still young. For one it gives money time to grow. It can also help to reduce the amount of inheritance tax (IHT) that might be paid in future.
Stock market investments are often seen as the best way to grow money over the long term.
A Bare Trust Account is an HL Fund and Share Account, which allows you to hold investments, set up as a ‘bare trust’.
What is a bare trust?
A bare trust is the simplest type of trust. Often used by grandparents, they allow a donor, also known as a settlor, to make an irreversible gift to a trust where someone, often a child, is named as the beneficiary. The assets are held in trust and the trust is managed by trustees.
What are the benefits of a bare trust?
There are five main benefits of bare trusts.
- Any tax usually falls upon the child - so there’s often little or no tax to pay. An exception to this rule is income arising on gifts from parents. If it exceeds £100, all income will be taxed as if it belongs to the parent. In this context, ‘child’ refers to a minor child or stepchild of the settlor (who is neither married nor in a civil partnership).
- Anyone can open and manage a bare trust for a child - this means you can control how the money is invested even if you’re not the parent.
- They can be useful for inheritance tax planning - gifts to a trust can reduce the value of your estate and the amount of tax that may need to be paid in the future.
- Withdrawals before the age of 18 – the child is automatically entitled to assets in the bare trust when they turn 18 (16 in Scotland), but the trustees can withdraw money beforehand as long as they can demonstrate it’s for the benefit of the child. For example buying their first car, musical instruments or residential trips. School fees could potentially also be paid this way, though it’s a grey area.
- No investment limits – unlike a Junior ISA or Junior SIPP, you can pay in as much as you want.
The value of tax savings will depend on your and the child's circumstances and tax rules can change over time.
Trusts can be complex so we suggest you seek specialist advice before applying. Investments can go down in value as well as up, so the child might get back less than you invest.
HL Bare Trust Account
- Start from £100 as a lump sum or £25 by monthly Direct Debit
- No dealing charges for funds
- Up to 0.45% each year to hold funds, other charges may apply depending on the investments chosen
- UK share dealing costs a maximum of £11.95 online. It’s free to invest your monthly Direct Debit in FTSE 350 shares and selected ETFs and investment trusts
- Free to hold shares, bonds, ETFs and investment trusts
See our Bare Trust Account charges
You can manage the account 24/7 using our website or app, and you can link it to other HL accounts you hold.
Your investment options
- Over 3,000 funds
- UK and overseas shares
- Corporate and government bonds
- Exchange traded funds (ETFs)
- Investment trusts
- HL’s own Ready-Made Investments
Investments can go down in value as well as up, so the child might get back less than you invest.
Think about a bare trust if:
- You want to save or invest tax-efficiently for a child’s future, without impacting your own allowances
- You’re looking to make a gift for inheritance tax purposes
- You want to give a child a head start before or after they turn 18
- You’re comfortable with the risks of investing
Think about alternatives to a bare trust if:
- You’re the parent of the child and you expect the income generated by the money in the trust to exceed £100
- The child does not already have a Junior Stocks and Shares ISA and they won’t need the money until after they turn 18
- You want full control over how the child uses the money once they turn 18 (16 in Scotland)
Creating a trust
When opening an account, you’ll need to set up a trust if you haven’t done so already. You can do this by completing a bare trust deed. We provide an example for you to fill in as part of the application form, but you can use your own.
Our Trust deed is not suitable for Scottish residents as it’s based on English and Welsh law.
There should normally be at least two trustees who will manage the trust, and the person making the gift, known as the settlor, can be a trustee if they want to.
Once you’ve set up the trust, you’ll normally need to register the trust with the government’s Trust Registration Service (TRS) within 90 days.
Due to the legal and tax implications associated with creating a trust, we recommend you consider taking financial, legal and tax advice on the suitability of a bare trust for your circumstances before opening an account with Hargreaves Lansdown. You must make sure that creating a bare trust is appropriate for your circumstances.
Open a Bare Trust Account
You’ll need to read and agree to our Terms and Conditions with Tariff of Charges (PDF), Key Features (PDF) and the Key (Investor) Information Documents for any investments you have chosen.
Then:
- Download an application form
- Complete the form
- Send it to us by post or email along with:
- an identity document for the child
- a cheque or completed Direct Debit mandate
- a copy of the evidence of the trust’s registration from the TRS – we can receive this later, but you can’t add or withdraw money until you send this
- a copy of the completed bare trust deed used to establish the trust
Once we’ve received the application we’ll aim to process it within 10 working days, as well as any investment instructions provided. We’ll send the lead trustee confirmation and the details they need to register for online access to the account. Please note, it is not possible to apply for this account online.
Frequently asked questions
Finder Awards 2024
Boring Money Awards 2024
The Personal Finance Awards 2023/2024
Help and support
If you have any questions about the HL Bare Trust Account, you can speak to one of our UK-based client support experts.
Call us on 0117 980 9000