UK Saving for Children (2026/27): Junior ISA vs Bare Trust vs Junior SIPP
Saving for children 2026/27: Junior ISA £9,000 limit, bare trusts and the £100 parental rule, Junior SIPP, Premium Bonds and IHT gifts.
Options compared
| Option | Tax status | Flexibility | Complexity |
|---|---|---|---|
| Junior ISA (£9,000 a year) | No Income Tax or CGT on growth; not caught by the parental £100 rule | Child can manage it from 16; money cannot be withdrawn until 18, when it becomes an adult ISA | Low - opened by a parent or guardian |
| Junior SIPP (£2,880 paid in, £3,600 with relief) | Basic-rate relief added; growth untaxed; withdrawals taxed as income apart from the tax-free portion | Locked until minimum pension age (55, rising to 57 from 6 April 2028) | Low - regulated product |
| Bare trust | Income and gains normally taxed on the child, except income from a parent's gift above £100 a year (taxed on the parent) | Child is entitled to the assets at 18 (16 in Scotland) | Medium - trustee duties; most must register on the Trust Registration Service |
| Designated account | The account is in the adult's name; a label alone may not create a trust for the child | Adult keeps control | Low, but ownership can be unclear |
| NS&I Premium Bonds (under 16) | Prizes free of Income Tax and CGT | Parent or guardian manages until 16; then the child | Very low |
A common order of priority
- Junior ISA (£9,000 a year) - no tax on growth, simple, and the parental £100 rule does not apply. The child gets the money at 18.
- Junior SIPP (£2,880 paid in, £3,600 with basic-rate relief) - if you want saving locked until pension age; anyone can pay in.
- Premium Bonds (under 16) - for occasional gifts; prizes are tax-free but not guaranteed.
- Bare trust (above the Junior ISA limit) - income taxed on the child within their allowances, which works best for gifts from grandparents because of the parental £100 rule.
- Designated accounts - convenient, but the money may legally remain the adult's; use a Junior ISA or bare trust if it should belong to the child.
Related guides
- UK JISA vs Junior SIPP 2026/27 - direct comparison.
- UK Premium Bonds 2026/27 - children under 16.
- UK IHT 7-Year Gift Taper 2026/27 - IHT context.
- UK Trust Taxation 2026/27 - bare + other trusts.
Frequently asked questions
What is a bare trust?
A trust where the child is entitled to the assets and income, while a trustee (often a parent or grandparent) holds and manages them. The child can take the assets at 18 in England and Wales, or 16 in Scotland (gov.uk). For Capital Gains Tax, the assets are treated as the child's under s.60 TCGA 1992. Income and gains are normally taxed on the child, who has their own £12,570 Personal Allowance, £1,000 Personal Savings Allowance, up to £5,000 starting rate for savings, £500 dividend allowance and £3,000 CGT annual exempt amount. The big exception is income from money a parent gave (see the £100 rule).
What's the "£100 rule" for parent gifts?
Under s.629 ITTOIA 2005, income from a settlement made by a parent that is paid to, or treated as the income of, their unmarried child under 18 is taxed as the parent's income. It does not apply in a tax year where the child's income from that parent's gifts is £100 or less; above £100, all of it is taxed on the parent, not just the excess. So a parent putting £40,000 into a bare trust that earns £2,000 of interest is taxed on the £2,000 at their own rates. The rule is about income, not gains, and it applies to parents only: income from a grandparent's gift is taxed on the child. Junior ISA income is tax-free, so it does not arise.
What's a "designated account"?
An account in an adult's name labelled for a child. The label on its own does not necessarily make the money the child's: the account holder keeps control, and whether a trust exists depends on what was intended and how the money is treated. If the money is the adult's, interest is taxed as their income and the money stays in their estate for Inheritance Tax. If you want the money to belong to the child, a Junior ISA or a properly documented bare trust makes that clear.
Bare trust vs Junior ISA - when does which win?
Junior ISA suits regular family saving up to £9,000 a year: no tax on growth, no trustee paperwork, and the parental £100 rule does not apply. Bare trust suits larger sums above the Junior ISA limit or specific assets, especially gifts from grandparents, where income is taxed on the child within their own allowances. In both cases the child gets the money as an adult (a Junior ISA at 18; a bare trust at 18, or 16 in Scotland), so neither lets you delay access beyond that.
How does Inheritance Tax (IHT) work for child savings?
Money you give a child is a gift for Inheritance Tax, whoever you are. Exemptions: (a) £3,000 annual exemption per donor, with one year's unused amount carried forward (s.19 IHTA 1984); (b) small gifts of up to £250 per recipient per tax year (s.20); (c) regular gifts out of surplus income that leave you able to maintain your usual standard of living (s.21), which need good records. A gift above the exemptions is normally a potentially exempt transfer: no IHT if you survive 7 years, with taper relief on tax due if you die between 3 and 7 years. This applies to parents and grandparents alike; the £100 rule is an Income Tax rule and is separate.
What about Premium Bonds for children?
NS&I Premium Bonds can be bought for a child under 16. Until the child's 16th birthday, the parent or guardian named on the application looks after them, whoever bought them; at 16 the child manages them. The minimum purchase is £25 and a child can hold up to £50,000 in total. Prizes are free of Income Tax and CGT. Returns come from a prize draw rather than interest, so the amount a holding earns is not guaranteed (NS&I).
What about a property purchased in trust for a child?
Possible but complex. With property held on bare trust, rental income is normally taxed on the child (who can use the £1,000 property allowance), subject to the parental £100 rule, and a gain on sale is the child's (using their £3,000 annual exempt amount). Stamp Duty Land Tax applies to the purchase. The trust should be documented and, unless an exclusion applies, registered on the Trust Registration Service. The child becomes entitled to the property at 18 (16 in Scotland). Take legal and tax advice before doing this.
How do I open and manage these?
Junior ISA: a parent or guardian with parental responsibility opens it with a bank, building society or investment platform; 16 and 17-year-olds can open their own (gov.uk). Bare trust: some platforms offer bare trust accounts, or a solicitor can draw up the trust. Most bare trusts must be registered on HMRC's Trust Registration Service; an exclusion covers a trust created as a requirement of opening a bank or building society account for a child under 18. Junior SIPP: offered by some pension providers. Premium Bonds: from NS&I online, by phone or by post.