Junior ISAs can be a convenient way to save for your children until they are 18. Like an adult ISA, Junior ISAs are tax-free and come in a range of savings and investment accounts.
What is a Junior ISA?
Junior ISAs work in the same way as the adult ISA. Junior ISAs have been introduced to replace Child Trust Fund. Individual Saving Accounts (ISAs) are like savings account, but the interest on the money you have saved is not taxed
Is my child eligible for a Junior ISA?
Your child will be eligible for a Junior ISA if:
- your child was born in 2011 after or before 1 September 2002;
- your child does not currently hold a CTF;
- they were born between 1st September 2002 and 3rd January 2011 and didn’t qualify for a Child Trust Fund.
What happened to the Child Trust Fund (CFT)?
The Child Trust Fund scheme was closed to new investors from the 1st August 2011, and replaced with the Junior ISA alternative as part of the government’s Budget cuts. Unlike the Child Trust Fund, Junior ISAs will not receive a cash contribution from the government.
What are the benefits of a Junior ISA?
There are several benefits of Junior ISAs:
- you can invest up to a total of £3,600 a year in a cash Junior ISA and/or a stocks and shares Junior ISA;
the interest is all tax-free; - after the child turns 18, the account will become a regular ISA.
Who can contribute to a Junior ISA?
Anyone, including grandparents or friends, can contribute funds to the Junior ISA up to the annual limit of £3,600.
What types of Junior ISA are available?
There are two types of Junior ISA:
- a cash Junior ISA, and
- a stocks and shares Junior ISA
You can take out both types of ISA at the same time. While the cash ISA will gain interest, the stocks and shares ISA will give your child tax-advantaged investments.
If you do choose to take out both types of ISAs, they do not have to be with the same provider. However, you will have to be mindful of the annual limit of £3600, which applies across both types of ISA.