Bare Trusts Explained: How They Work in England and Wales

A bare trust is the simplest form of trust. A trustee holds an asset in their own name, but one named beneficiary has an absolute right to both the capital and the income, and can generally require it to be handed over once they reach 18 in England and Wales.

Because the beneficiary is fixed from the outset and cannot be changed, a bare trust is often used to hold money or investments for a child or grandchild until they are old enough to receive it. This guide explains how a bare trust works, what it is used for, and how it is taxed. It sits within our wider Trusts Explained overview and our estate planning guide. Figures are current as at July 2026 and are subject to change.

What is a bare trust?

A bare trust, sometimes called a simple or absolute trust, is an arrangement where a trustee holds assets in their name for one or more named beneficiaries who are absolutely entitled to them. On gov.uk the position is that the assets are held in the trustee's name, but the beneficiary has the right to all of the capital and income at any time once they are 18 or over in England and Wales (gov.uk, types of trust, as at July 2026). The trustee has no discretion over who benefits.

How does a bare trust work?

A bare trust has three roles. The settlor puts assets in, the trustee holds legal title and manages them, and the beneficiary owns the underlying benefit. The beneficiary is named at the start and cannot be swapped later, which is what makes the arrangement absolute rather than discretionary. While the beneficiary is under 18, the trustee looks after the assets on their behalf.

• Settlor. The person who transfers assets into the trust, often a parent or grandparent.
• Trustee. Holds legal ownership and manages the assets, but only for the named beneficiary.
• Beneficiary. Has an absolute right to the assets, and can call for them at 18 in England and Wales (gov.uk, as at July 2026).

Once the beneficiary reaches that age, they can generally require the trustee to transfer everything to them outright. The trustee cannot refuse or attach conditions, which is a key difference from a discretionary arrangement.

What is a bare trust used for?

Bare trusts are commonly used to pass assets to young people, with trustees looking after them until the beneficiary is old enough to take control (gov.uk, as at July 2026). Because they are simple and inexpensive to set up, many people choose them for straightforward gifts rather than more complex trust structures.

• Holding savings or investments for a child or grandchild until they turn 18.
• Receiving a gift or inheritance intended for a specific person who is currently a minor.
• Holding an asset for someone where the giver simply wants a clean, single-beneficiary transfer.

How is a bare trust taxed?

For tax, a bare trust is largely treated as though the assets belong directly to the beneficiary, because they are absolutely entitled to them. In general the beneficiary, rather than the trustee, is the person whose income tax and capital gains tax position matters, and the beneficiary can usually use their own allowances. The exact treatment depends on circumstances, so this is an area many people confirm with a qualified professional.

Income tax and capital gains tax

Because the beneficiary is absolutely entitled, income and gains from a bare trust are generally treated as theirs and set against their own personal allowances, rather than taxed at trust rates. One important exception applies where a parent puts assets into a bare trust for their own minor child: if that produces more than a small amount of income each year, that income can be taxed as the parent's instead. This is a technical area and the figures involved should be checked with a qualified professional before relying on them.

Inheritance tax and the seven-year rule

Putting assets into a bare trust is usually treated as a gift to the beneficiary, so it is generally a potentially exempt transfer for inheritance tax. No inheritance tax is due on a gift if the person giving it lives for seven years afterwards; if they die within that period, tax may be due, with taper relief reducing the charge on gifts made three to seven years before death (gov.uk, gifts and the 7 year rule, as at July 2026, subject to change). Each person also has an annual gift exemption of £3,000 (gov.uk, as at July 2026, subject to change). This differs from many other trusts, which can face their own inheritance tax charges.

Source: gov.uk/inheritance-tax/gifts, as at July 2026, subject to change. Taper relief applies only where total gifts in the 7 years before death exceed the £325,000 nil-rate band (gov.uk, as at July 2026), and the band is frozen until the end of the 2030-31 tax year (5 April 2031) (gov.uk), subject to change.

Points to weigh before using a bare trust

A bare trust is simple, but its simplicity is also its main limitation. Because the beneficiary is fixed and gains full control at 18, it offers little protection where a giver wants to keep a say over how and when assets are used. It can suit a clean gift to a young person, but it is not designed for situations that call for ongoing control or flexibility.

• No later control. The beneficiary can take everything at 18, whatever their circumstances at that point.
• Fixed beneficiary. The named person cannot be changed, even if family circumstances shift.
• Limited protection. The assets form part of the beneficiary's own estate and finances once they are entitled.

A bare trust answers a simple question well: who is this for. It is less suited to the harder questions of when, how much, and under what conditions.

Where those harder questions matter, some people consider a discretionary trust or an interest in possession trust instead, each of which keeps more flexibility but comes with more complexity and its own tax treatment.

Bare trusts in Scotland and Northern Ireland

This guide describes the law of England and Wales, where a bare trust beneficiary can generally take control at 18. In Scotland the equivalent age is 16, so a beneficiary there can require the assets earlier (gov.uk, as at July 2026). Scotland also has its own body of trust and succession law. Northern Ireland has a separate but broadly similar system to England and Wales. Where an arrangement touches more than one UK nation, it can be worth taking advice in each.

Frequently asked questions