Guide to Junior ISAs
Allowances and rules explained
We don't offer Junior ISAs right now, but here’s some information on them in case you need it.
A Junior ISA or 'JISA' is an Individual Savings Account where you can put money away for your child, tax-free, that they can access once they reach 18.
How do Junior ISAs (JISAs) work?
JISAs work in a similar way to adult ISAs by allowing you to save money for your child without paying Income Tax (or Capital Gains Tax) on the interest or returns you receive.
You can open a JISA as long as you’re either the parent or guardian of the child, but the money belongs to the child. This means that you (or any friends and family) can pay money in, up to the annual JISA allowance each tax year, but you won’t be able to make any withdrawals.
Once your child turns 16, they’ll be able to take control of the account and add money to it if they want to, but they won’t be able to withdraw any money until they turn 18.
If you’re interested in a savings option with a bit more flexibility so you can access the money if you want to, you might prefer to open a children’s savings account.
What’s the annual allowance?
The annual allowance for JISAs for the 2018/2019 tax year is £4,260, which you can pay into a Junior cash ISA, a Junior investment ISA, or split the amount between the 2.
What’s the difference between a Junior cash ISA and a Junior investment ISA?
As with adult ISAs, there are 2 types of JISA that you could choose to open – a Junior cash ISA or a Junior investment ISA.
Junior cash ISAs work in a similar way to a normal savings account, except that you don’t pay UK Income Tax on the interest your money earns.
Junior investment ISAs can offer a potentially higher rate of return on the money as savings are invested in the stock market. And you also won’t pay UK Income Tax or Capital Gains Tax on any of the returns.
However, it’s important to consider that the value of investments – and so, the amount in the JISA – could go down as well as up.
If you’re not sure if a Junior investment ISA is the right option for you and your child, seek independent advice.
What happens to the JISA when my child turns 18?
Until your child’s 18th birthday, no one will have been able to withdraw money from the JISA.
Once your child turns 18, the account changes to a normal adult ISA that your child will be able to add to, and withdraw from, as they would with any other ISA.
The annual allowance that applies to the ISA will also increase to match the normal ISA limit. For the 2018/2019 tax year, they can add up to £20,000 tax-free.
Remember too, that once your child turns 16, they will be able to open an adult cash ISA of their own (as well as the JISA you opened for them). They’ll be able to add up to the full annual allowance to their own ISA (£20,000 in 2018/2019 tax year) and up to the annual JISA allowance (£4,260 for the 2018/2019 tax year) to the JISA.
Once they turn 18 and can access the money in the JISA, your child will be given the option to combine both JISA and ISA if they want to – as long as the ISA allows you to transfer the JISA balance into it.
JISA vs Child Trust Fund?
As long as you’re the parent or guardian of the child, you can open and manage a JISA.
However, if your child was born between 1 September 2002 and 2 January 2011, you’ll have been offered £500 by the government when your child was born to save in a Child Trust Fund (CTF).
At the moment, you can’t open a JISA if you already have a Child Trust Fund. However, from April 2015, you’re able to transfer money from a Child Trust Fund to a new JISA if you want to.
We don’t currently offer a cash or stocks and shares Junior ISA, but you can get more information about Junior ISAs on the government’s website.