Bare Trust to junior ISA 1 December 2022 at 4:24PM in Savings & investments 3 replies 92 views

combestrocket

I have been putting money regularly into a HL trading account set up as a Bare Trust, the beneficiary is my grandson.The investments have done very well snd I have made a couple of sales to offset any capital gains liability. The recent changes to capital gains allowances being phased in over the next 2 years has made me think that the money would be better in a junior isa. My grandson has such an isa opened and operated by his parents. My question is do I have the authority to cash in the investments in the bare trust and reinvest them in my grandson's jisa? Although this would benefit my grandson from a tax perspective when he is entitled to the funds I am concerned that the loss of control over the investments might be against the rules relating to bare trusts.

xylophone

I assume that you are the sole Trustee of the Bare Trust and that it is you who are making regular gifts into Trust.

The beneficial owner of the assets within the Trust is your grandson and they  must be used for his benefit.

https://www.taxinsider.co.uk/the-bare-essentials-bare-trusts-ta

https://www.gov.uk/trusts-taxes/registering-a-trust

He has the absolute right to access to and control of the assets within the Trust once he reaches the age of 18.

By choosing to sell assets and transfer money out of the Trust into your grandson's JISA, in effect you are moving his own money  into his JISA.

https://www.moneyhelper.org.uk/en/savings/types-of-savings/junior-isas#:~:text=Junior ISAs let you save,away can grow even faster.

combestrocket

Thanks for the info and links. There are in fact two other trustees my wife and my son and the regular contributions are split between me and my wife. I can see that I would in essence be moving money between my grandson's accounts. My  concern is that I would be closing down the bare trust account which I am able to control and moving the proceeds to an account I am unable to manage,  a junior isa.

xylophone

 My  concern is that I would be closing down the bare trust account which I am able to control and moving the proceeds to an account I am unable to manage,  a junior isa.

Your first post questioned whether you had the authority to move funds from the Bare Trust to the JISA.

If there are three Trustees, then it is likely (unless the terms of the Trust permit just one or two Trustees to sign) that the authority of all three would be needed to move the money from the Trustee account to the JISA.

Presumably there would be no difficulty about this.

With regard to the JISA, no, you cannot manage it but your son (who presumably is the registered  contact) can.

If he has been content for you to choose the investment strategy for the bare trust, presumably he would accept your guidance on managing the JISA?

https://www.gov.uk/junior-individual-savings-accounts

That said, you should note 

The child can take control of the account when they’re 16, but cannot withdraw the money until they turn 18.