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What is an cash ISA - ISA facts explained by uSwitch

Junior ISAs – the basics

Junior ISAs can be a convenient way to save for your children until they are 18. Like a regular 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 regular ISAs – Individual Saving Accounts where the interest on the money you save is free from tax. Junior ISAs were introduced to replace Child Trust Fund.

The Child Trust Fund scheme was closed to new investors from the 1 August 2011 and replaced with the Junior ISA. Unlike the Child Trust Fund, Junior ISAs do not receive cash contributions from government.

Is my child eligible for a Junior ISA?

Your child is eligible for a Junior ISA if:

  • they were born in 2011 after or before 1 September 2002
  • they don’t have a Child Trust Fund
  • they were born between 1 September 2002 and 3 January 2011 and didn’t qualify for a Child Trust Fund

What are the benefits of a Junior ISA?

There are several benefits of Junior ISAs:

  • you can have a Junior cash ISA and Junior stocks and shares ISA
  • the interest earned is tax-free
  • when your child turns 18, the account become a regular ISA
Some current accounts will offer a better return on your money than many savings accounts

Grandparents and friends can also contribute towards a Junior ISA up to the annual limit of £3,600. This limit will apply until 5 April 2013.

What types of Junior ISA are available?

There are two types of Junior ISA – cash and stocks and shares.

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’ll need to be mindful of the annual limit of £4,080, which applies to both cash and stocks and shares.