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Junior ISAs

Questions & Answers

Parents looking to build a nest egg for their children may want to consider saving into a Junior ISA, as returns are tax-free and kids can’t get their hands on the money until they are much older

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The aim is to create a fund to help children in their adult life, whether by providing a property deposit or by covering university costs.

Here’s all you need to know to decide whether a Junior ISA is the right choice for your children’s savings…

Q What exactly is a Junior ISA?

A Junior ISA works in a similar way to other ISAs, in that it allows parents to save tax-free, this time on behalf of their children.

All children born on or after 3 January 2011 or before 1 September 2002 are eligible.

Like ‘adult’ ISAs, there are two kinds of Junior ISA to choose from – a stocks and shares Junior ISA, where your money is invested in the stock market, and a cash ISA that is basically a tax-free savings account.

All children born on or after January 3, 2011, and those born before 1 September 2002 are eligible for a Junior ISA...

Q But I thought children don’t normally pay tax anyway?

Most children don’t pay tax on their savings, but Junior ISAs can be held into adulthood. So, even once your child starts working and paying tax, any money held in their Junior ISA will still grow tax-free.

Q Are there any differences between adult ISAs and Junior ISAs?

Yes. If you open a Junior ISA on behalf of your child, only they can access the money in the account. 

They will not be able to do this until they reach the age of 18, although they can take charge of the account at 16.

‘Normal’ ISAs, on the other hand, usually allow you to make withdrawals whenever you need, unless you choose a fixed rate cash ISA that allows no withdrawals during a fixed term.

The maximum amount you can invest in a Junior ISA is lower at £9,000 in 2021/22.

This is the amount that can be invested in cash, stocks and shares, or a combination of the two.

Q How many Junior ISAs can my child have?

Your child is only allowed one cash Junior ISA and one stocks and shares Junior ISA at any one time. 

Q Are there any charges to open a Junior ISA?

Not if you are opening as cash ISA. However, if you are opening a stocks and shares Junior ISA, you will have to pay management charges, so always check the small print so that you understand exactly how much you’ll have to pay.

Q What if I don’t use this year’s allowance?

Then it will be gone for good. ISA allowances can’t be rolled over to the following year, so if you don’t use your allowance one tax year, it will be lost forever. 

Q Who’s eligible for a Junior ISA?

All children born on or after 3 January 2011 or before 1 September 2002 are eligible for a Junior ISA (opened for them by a parent or guardian).

Children born outside these dates have Child Trust Funds instead. These were introduced in 2005 to encourage parents to save for their children, but were scrapped and replaced by Junior ISAs in 2011.

Q Can people with Child Trust Funds move their money into Junior ISAs?

Yes, transfers from Child Trust Funds into Junior ISAs have been permitted since April 2015. 

Q What happens when a child with a Junior ISA reaches the age of 18?

Any money held in a Junior ISA is automatically rolled over into a normal ISA once the child reaches the age of 18 so it will remain tax-free. The child can then continue saving or spend the money as they wish.

Q Can you transfer Junior ISA accounts?

Yes. If you aren’t happy with the way your ISA is performing, you can transfer your money to a different provider at any time.