Bare trusts - frequently asked questions

The money in the account belongs to the named child under the bare trust. However, the child does not have control of the money, and cannot demand any of it, until they have reached their relevant birthday.

As account holder and trustee, you will receive all information about the FSFC account, including statements and all correspondence. 

We won't communicate with anyone else, including the beneficiary, about the account. You can therefore choose how much information to share with the named child until they reach their relevant birthday.

Yes, because the money belongs to the child. Any withdrawals have to be used only for the named child. You can give the named child cash to spend on themselves. You can spend the money on things for the child - for example, clothing, book, toys, school fees or school trips.

You shouldn’t use FSFC money to pay for things for other people. For example, you can’t buy clothing for yourself or use the money for a new family car or family holiday.

No. Once a bare trust is created, it generally cannot be cancelled or terminated. 

If you close the account, you should give the money to the child. If you don't want to do this or look after the money for them any longer, you'll need to arrange for someone else to take over as a replacement trustee.

If you want to withdraw or transfer all or part of the money to another account or provider, it will still be bare trust money. Your responsibilities as trustee will continue when you transfer it.  

If you transfer the money to another account or another provider, you must therefore disclose that the named child is the beneficiary and the money is held for them under bare trust.

The named child is entitled to the money once they reach 18 (if you live in England, Wales or Northern Ireland) or 16 (if you live in Scotland). This means that if they know about the money, they can ask you for it. If the named child is not aware of the account, you have a responsibility as trustee to tell them about the money when they reach 18 or 16 and ask them what they want to do with it. They may want to pay it into a new or existing account in their name with HSBC or another bank. 

You can then tell us where to send the money. You can make this payment online or using phone banking.

Under the bare trust rules, it’s up to the named child to decide what they want to do. They may not want to use the money straight away when they reach age 18 or 16, but they can do if that’s what they want.

You should discuss with them what to do and pay the money to them when they've decided.

You can close the account at any time and move the money. Remember that until the named child reaches the relevant birthday, the money must still be held and controlled by you on trust for the child. You should tell your new account provider about this arrangement.

When the child reaches the relevant birthday, and has asked you to transfer it to them, you can withdraw or transfer the balance and ask us to close the account. We will issue you with a closing statement and confirm that the account has been closed.

It's your responsibility as trustee to make sure that:

• the money goes to the child
• you can account for how the money has been spent

If you've used any money for any other purpose, you should make sure you pay it back into the account as soon as possible.

You may find it helpful to keep records or receipts of what you've spent the money on, particularly if you make regular payments or withdrawals from the account.

Income tax: Interest paid into the FSFC account is paid gross of tax.

Any interest paid on an FSFC account is taxable.  The “beneficiary” is usually liable for any income tax due, subject to applicable personal tax allowances. 

If interest income in the account exceeds a child’s personal tax allowance, you, as trustee, should make sure you or the named child’s parent or guardian is given information about the interest income from the account to enable them to disclose this information to HMRC or the tax authority where they are resident.

If the account has been opened by a parent and ALL of the following are true:

• • The original money from the future saver was a gift from a parent or step parent; and,
  • The amount of interest in a tax year is above £100;
  • The beneficiary (child) is under 18; and
  • The beneficiary (child) is not and has never been married or in a civil partnership.

The parent who made the cash gift will be responsible for paying tax on any interest income paid on the account.

You can find more information about how money in the account is taxed online.

HSBC is unable to provide tax advice.  If you need tax advice you should contact a tax adviser.

Not whilst the child is a minor and the only asset is a cash deposit.  If the trust continues after age 18 (16 if the trustee resides in Scotland) or the assets were changed to include non cash deposit assets then it would need to be registered on the Trust Registration Service administered by HMRC. 

If the child is already over 18 (16 if the trustee resides Scotland) then the bare trust would need to be registered by the trustee on Trust Registration Service administered by HMRC by 1 September 2022.

Further information on the trust registration service and how to register can be found at.

HSBC is unable to provide tax advice.  If you need tax advice you should contact a tax adviser.

You don't have to declare gifts into a bare trust when the gifts are made. 

Gifts made to a bare trust are either exempt or potentially exempt from Inheritance Tax.

If a gift into a trust is potentially exempt, it may need to be included in the donor’s Inheritance Tax calculation if the donor dies within 7 years of making the gift.

Find out more about the difference between exempt and potentially exempt gifts. 

Funds held in an FSFC account will not form part of the trustee's personal estate. Instead they will form part of the named child's estate. If the beneficiary has not yet reached maturity (either 18 or 16), the FSFC account can remain open.

Yes. The beneficiary will benefit from the amounts protected under the Scheme.  If the beneficiary holds other accounts with HSBC UK, the total amount of all balances held on these accounts will be relevant when determining whether sufficient protection under the Scheme exists.

Normally we'd expect you to let the child know of the money when they reach their relevant birthday. However, we understand that there may be circumstances where  this might not be possible.

If the beneficiary is not in a position to make decisions for themselves about their financial affairs, you may need to make formal arrangements to manage their finances on their behalf. This may include obtaining authority from the Court of Protection. You can learn more about how the Court of Protection can support you with someone needing help with their finances.