Leanne Macardle

Leanne Macardle

Published: 06/12/2018

At a glance

  • Junior ISAs offer a tax-free way for you to save for your child’s future.
  • Once the funds are in a Junior ISA, they can only be accessed by the child when they reach the age of 18.
  • A child can hold only one cash Junior ISA and one stocks and shares Junior ISA at the same time.
  • Child Trust Funds can be transferred to Junior ISAs without penalty.

Below we've compiled some common questions about how this scheme works. We hope you find this information useful.

Is my child eligible?

Your child is eligible to open a new Junior ISA if they don't have a Child Trust Fund (CTF) and are under the age of 18. If your child is a UK resident and born between 1 September 2002 and 2 January 2011, they should be enrolled in the CTF scheme (a CTF will have been opened by the Treasury on their behalf if you did not use the Government voucher sent to you). However, old CTFs can be transferred to Junior ISAs, giving you plenty of options.

Under current rules, CTF holders will also be able to open a cash ISA at the age of 16 and have the same dual allowance as Junior ISA holders.

Will the Government contribute to my child's ISA like they did for Child Trust Funds?

No, the Government will not make any contributions into your child's Junior ISA.

Who offers Junior ISAs?

Banks, building societies, friendly societies and other financial providers offer Junior ISAs.

Who can open a Junior ISA?

A Junior ISA can be opened by anyone with 'parental responsibility' for a child or, if your child is between 16 and 18, they can open their own.

Grandparents can't open a Junior ISA for their grandchildren (unless they have parental responsibility for the child). However, grandparents will be able to contribute to the account once it is opened.

How much can we pay in?

You can save or invest up to £4,368 into a Junior ISA in the 2019/20 tax year (which runs from 6 April to the following 5 April). 

Can the money be accessed?

Money in your child's Junior ISA can only be accessed by the child once they turn 18.

What happens to the Junior ISA when my child turns 18?

The account becomes an adult ISA, preserving its tax-efficient status.

Can we invest in stocks & shares for our child?

Your child can hold one cash and one stocks & shares Junior ISA at any one time.

You can choose how you allocate money between the two, so long as you don't exceed the total annual limit.

Other than the annual cap there is no limit on how you choose to save – you could place the entire allowance in a stocks & shares Junior ISA, although you then couldn't place any money in a cash Junior ISA in that tax year (or vice versa).

Will we be able to transfer to a different Junior ISA later on?

Yes you will, although your child will only be able to hold one cash and one stocks & shares Junior ISA at any one time.

Can we transfer our child's CTF into a Junior ISA?

Yes, from April 2015 Child Trust Funds can be transferred to Junior ISAs.

How much can our child expect to have by the time they turn 18?

How much your child's nest egg will be worth will depend on:

  • Where you choose to place their money
  • How much you put into the Junior ISA
  • The rate of return you get.

Remember that any funds placed in investments can fall as well as rise in value.

Can my child manage their own Junior ISA?

Until the child reaches 16, those who have parental responsibility for the child will need to manage the ISA. Once the child reaches 16, they can start to manage their own pot (although they can't make any withdrawals until they are 18).

At the age of 16 you can open an adult cash ISA; can my child have both?

Yes. Between the ages of 16 and 18, your child can have a Junior ISA and an adult cash ISA. Under the 2018/19 ISA limits, that means they can have £24,260 between a Junior ISA and an adult cash ISA (£24,368 in 2019/20)

At 18, the Junior ISA becomes an adult one, and your child will be able to save or invest up to the adult ISA limits only.

Pros and Cons of Junior ISAs

  • Your child won’t pay any tax on the interest they earn on funds in a Junior ISA.
  • It enables parents, grandparents and others a way to save for a child’s future knowing the funds can’t be accessed until the account holder’s 18th birthday.
  • With the option to hold one cash Junior ISA and one stocks and shares Junior ISA per child, you can split the maximum amount you can invest every year, in order to diversify when cash and stocks and shares.
  • Neither you nor the child can access the funds for any reason before their 18th.
  • Once they are 18, you have no say over how they use their savings!

Why choose an ISA over a children's savings account?

ISAs pay interest tax-free. When your child becomes a taxpayer or they earn more than their Personal Savings Allowance, their savings interest may get taxed. By putting it in an ISA, a child's savings pot becomes shielded from taxation.

Junior ISAs can't be accessed until your child turns 18, so they will only have access to their cash at an important time in their lives – to help get through university or to start driving, for example. Children’s savings accounts, in contrast, could be accessible earlier. For a more comprehensive comparison between child savings accounts and Junior ISAs, why not check out our guide on savings accounts for children?

Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.


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