Best Buy Junior ISA accounts

• Available to children under the age of 18, who don’t have a Child Trust Fund
• Save or invest up to £3,720 in the 2013-14 tax year
• Has to be opened by the child, or the child’s parent or guardian
• Anyone can pay into the JISA
• Money can’t be accessed until the child turns 18 (although the child can take charge of the account at 16)

Junior ISAs (or JISAs) were launched in November 2011 as a tax-free method of saving or investing for children. It replaced the Child Trust Fund (CTF) scheme for newborn children, and allows older children a tax-free way to save.

Children are eligible for a Junior ISA if they are under the age of 18 and do not already hold a Child Trust Fund (your child will hold a CTF if they were born between 1 September 2002 and 1 January 2011). Unfortunately Child Trust Funds cannot be transferred to Junior ISAs, although you can continue to contribute to your child’s CTF, as well as transferring to a more competitive CTF if the interest rate is not as attractive as it once was.

2013-14 Junior ISA allowance

In the 2013-14 tax year (which runs from 6 April 2013 to 5 April 2014) you can save or invest up to £3,720 in a Junior ISA.

You can save for your child either in a cash (savings account) JISA, a stocks and shares JISA, or a combination of the two. For example:

• Up to £3,720 in a cash Junior ISA, or
• Up to £3,720 in a stocks and shares Junior ISA, or
• £2,060 in a cash JISA and £1,660 in a stocks and shares JISA (or any other split), up to the maximum yearly allowance of £3,720

Stocks and shares Junior ISAs can fall as well as rise in value. Make sure you fully understand and accept the risks you are taking before entering into any arrangement.

16 and 17-year-olds currently get two ISA allowances. In the 2013-14 tax year they have a Junior ISA allowance of £3,720 and a cash ISA allowance of £5,760 too!

Why a Junior ISA over a normal children’s savings account?

Cash Junior ISAs come in the same varieties as normal children’s savings accounts. With most children not paying tax on savings interest they receive, what’s the advantage of putting money in a Junior ISA?

1. The money cannot be accessed until the child turns 18, putting it out of temptation’s reach.
2. Money that parents or step-parents pay into a child’s savings account may be liable for tax if the child earns more than £100 interest. Junior ISAs are exempt from this rule.
3. Later on your child may be a taxpayer. If they start a full time job at the age of 16 it’s probable that they will no longer be eligible for tax-free interest on their savings.

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