Saving for Junior

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Junior ISAs (JISA) are long-term, tax-efficient savings accounts for children, introduced in November 2011 to supersede the phased-out Child Trust Fund (CTF).

There are two types of JISA:

  1. A cash Junior ISA – where you won’t pay tax on interest on the cash you save
  2. A stocks and shares Junior ISA – where your cash is invested, and you won’t pay tax on any capital growth or dividends you receive

Since April 2015, anyone with a CTF has been able to transfer that money into a JISA. Whilst the savings limit for both the CTF and JISA are the same (£4,260 in the 2018/19 tax year) CTFs have become less innovative and attract a lower interest rate than JISAs, making the latter a more attractive proposition for parents looking to create a tax-efficient nest egg for their kids.

One, or both types of JISA can be opened by parents or guardians with parental responsibility for a child aged 17 or under who lives in the UK. The child takes control of the account when they’re 16 (until then the parent manages the investment), but can only withdraw the money when they turn 18. Children aged 16 and 17 can open their own Junior ISA as well as an adult cash ISA.

Topping up

Anyone can pay money into a JISA as long as the total amount invested is no more than £4,260 in the 2018 to 2019 tax year. If you’ve invested in both types of JISA, this is the total amount you can pay across the two accounts in the current tax year.

JISAs automatically lose their Junior status when the child turns 18 and the maximum contribution limit increases to that of an adult ISA. Which is £20,000 in the 2018 / 19 tax year.

If you want to know more about investing for children, or yourself, please get in touch.

Contains public sector information licensed under the Open Government Licence v3.0. The tax efficiency of ISAs is based on current rules. The current tax situation may not be maintained. The benefit of the tax treatment depends on the individual circumstances. The value of your stocks and shares ISA and any income from it may fall as well as rise. You may not get back the amount you originally invested.

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