A Junior ISA (JISA) is a fantastic way to save or invest money tax-free for your child’s future. You can choose between a Cash Junior ISA, which earns interest like a regular savings account, or a Stocks and Shares Junior ISA, which invests in assets like stocks, bonds, and funds for potentially higher long-term growth. When your child turns 18, the money becomes theirs — completely tax-free.
Saving for your child’s future is one of the smartest financial moves you can make. A small monthly contribution can grow into a sizeable nest egg, whether to support them when they leave home, or as a deposit for their first home.
What is a Junior ISA?
A Junior Individual Savings Account (Junior ISA or JISA) is a long-term, tax-free savings or investment account for children under 18. It was launched by the UK government to encourage families to build savings for their kids’ futures.
- Lock-in until 18: Money invested in a Junior ISA is locked away until your child’s 18th birthday, when it becomes theirs to use.
- Tax advantages: All gains, dividends, and interest earned inside a Junior ISA are completely free from tax — no Capital Gains Tax, Dividend Tax, or Income Tax.
Tax benefits explained
- Capital Gains Tax: Normally paid on profits from selling investments over £3,000 per tax year, but none applies within a Junior ISA.
- Dividend Tax: No tax on dividends earned inside a Junior ISA (outside, the first £500 are tax-free).
- Income Tax: Interest earned inside a Junior ISA is tax-free, unlike standard savings accounts where interest is taxable.
Without a Junior ISA, taxes can eat into savings growth, but with one, your child’s money grows faster and stays untouched by tax.
Who can open and contribute to a Junior ISA?
- The child must be under 18 and a UK resident.
- Only a parent or legal guardian can open a Junior ISA on behalf of the child.
- When the child turns 16, they can take over managing their Junior ISA, but cannot withdraw money until 18.
- Anyone can contribute money: parents, grandparents, family, and friends — all contributions belong to the child.
Tip: Set up a regular monthly payment to build the savings pot steadily over time — even small amounts add up!
Types of Junior ISA
- Cash Junior ISA
Similar to a regular savings account, you add cash and earn interest — all tax-free. At 18, it converts automatically to a standard Cash ISA. - Stocks & Shares Junior ISA
Your child’s savings are invested in a mix of assets managed by experts aiming for growth over time. Investments can include:- Stocks and shares: Ownership in companies, which may increase in value.
- Bonds: Loans to companies or governments paying interest.
- Exchange-traded funds (ETFs): Funds grouping multiple investments, spreading risk.
At 18, it converts into a regular Stocks & Shares ISA.
Which should you choose — Cash or Stocks & Shares Junior ISA?
- Long-term savings (0–15 years old): Stocks & Shares Junior ISA is generally better, with average returns of 5-8% per year and the power of compound interest growing the pot significantly.
- Short-term savings (15–17 years old): A Cash Junior ISA may be safer to avoid market fluctuations that could reduce the pot just before the money is needed.
What about a Child Trust Fund?
Child Trust Funds (CTFs) were the predecessor to Junior ISAs for children born between 2002 and 2011. They have similar tax benefits but are no longer available to open. Existing CTFs can be topped up or transferred to a Junior ISA.
How to open a Junior ISA
Opening a Junior ISA is easy and quick. You can do so through banks, investment platforms, or specialist providers. Some popular Stocks & Shares Junior ISA providers include:
- Moneyfarm: Expert advice with socially responsible investment options.
- Beanstalk: Easy-to-use app with simple investment choices.
- Wealthify: Low entry point and expert-managed funds for beginners.
For Cash Junior ISAs, providers like Tesco Bank offer competitive interest rates and easy online management.
Junior ISA annual allowance and contributions
- The annual allowance is £9,000 per child per tax year (April 6 – April 5).
- Unused allowance cannot be carried over.
- Each child has their own allowance — no sharing between siblings.
- Contributions to a Junior ISA do not affect your personal ISA allowance of £20,000.
What happens when the child turns 18?
- The Junior ISA automatically converts into an adult ISA (Cash or Stocks & Shares).
- The child can then withdraw or continue saving/investing.
- Opening a Lifetime ISA at 18 can give a 25% government bonus on savings, ideal for first home purchases or retirement.
Can you transfer a Junior ISA?
Yes! If you find a better provider or want to consolidate, transferring is simple and usually free. The new provider handles the transfer, ensuring your child’s savings remain protected.
How safe are Junior ISAs?
Junior ISAs are protected by the Financial Services Compensation Scheme (FSCS) up to £85,000, safeguarding your money if the provider fails. All providers must be authorised by the Financial Conduct Authority (FCA).
Final thoughts
A Junior ISA is a powerful, tax-efficient way to build your child’s financial future. Whether you choose a Cash or Stocks & Shares Junior ISA depends on your child’s age and your risk tolerance, but starting early is key to growing a substantial fund.
Remember, the money belongs to your child and can help them take big steps in life — from education to buying their first home. So why wait? Start saving today and give your child a valuable financial head start!
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