As it is not a tax wrapper like a pension or Isa, there is no limit on the amount that can be invested in a bare trust account.

Income and capital gains within the account are chargeable to tax, but are treated as belonging to the beneficiary.

A child has the same personal allowances as an adult, that is personal allowance, personal savings allowance and a starting rate for savings of 0 per cent, meaning up to £18,500 of income a year could be tax free plus a capital gains allowance of £12,000.

One crucial point to be aware of though is that if a parent puts money into the bare trust account and the income exceeds £100 a year (or £200 if both parents pay in), then the income is taxed on the parents.

This is why bare trust dealing accounts are most commonly used for grandparents to make gifts, rather than parents.

Mix it up

Of course, deciding which option is best is not an either/or situation. Simon may decide to set up a Jisa to save into for Josh, while the grandparents set up a bare trust account as well as leaving provision for Josh to inherit a proportion of their pension assets on death.

Looks like Josh is going to be off to a good start.

Lisa Webster is senior technical consultant at AJ Bell