Junior ISAs - JISAs - Children's ISAs | moneyfacts.co.uk

Junior ISA Best Buys

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3.50%
Variable Age 18 £1 Yes
  1. No
  2. Yes
  3. Yes
  4. No
Details...  

3.25%
Variable Age 18 £1 Yes
  1. Yes
  2. Yes
  3. No
  4. No
Details...  

3.25%
Variable Age 18 £25 Yes
  1. No
  2. Yes
  3. No
  4. Yes
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3.15%
Variable Age 18 £1 Yes
  1. Yes
  2. No
  3. No
  4. Yes
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3.00%
Variable Age 18 £1 Yes
  1. Yes
  2. Yes
  3. No
  4. No
Details...  

3.00%
Variable Age 18 £1 Yes
  1. No
  2. Yes
  3. No
  4. No
Details...  

Moneyfacts.co.uk Best Buys show the best products chosen by our independent experts. Where we have been able to we have also provided a link for you to open an account today. Products shown with a yellow background are sponsored products.

Eligible deposits with UK institutions are protected by the Financial Services Compensation Scheme up to a maximum level of protection of £85,000 per person per institution.

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All rates subject to change without notice. Please check all rates and terms before investing or borrowing.
 

Junior ISAs explained

To determine if a Junior ISA (Junior Individual Savings Account) is right for your child, you'll probably have a lot of questions. Read on below as we answer the most commonly asked ones about this long-term tax-free savings vehicle for children.

What is a Junior ISA?

A Junior ISA is:

  • Available to children under the age of 18
  • A tax-free vehicle that allows you to save or invest up to the Junior ISA limit of £4,260 in the 2018-19 tax year (though remember that tax advantages will depend on your individual circumstances and may change in the future)
  • To be opened by the child's parent or guardian, after which anyone can pay into it
  • A pot that 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). However, Child Trust Funds can now be transferred to Junior ISAs, so you're free to move the funds across should you wish. Of course, you can still continue to contribute to your child's CTF and even transfer to a more competitive CTF if a JISA transfer isn't for you.

There are two types of Junior ISAs available: cash and stocks & shares. As with their adult counterparts, cash JISAs offer a fixed or variable rate of interest, whereas stocks & shares JISAs see your child's money invested in the stock market. While the latter can result in bigger returns, it also comes with bigger risks, as your child may end up with less than has been put in.

Unlike adult ISAs, there's no possibility to withdraw money from a children's ISA before the child in question turns 18. Other differences include the lesser allowance and the fact that you can only have one of each type of JISA per person.

While some may see the restrictions on JISAs as a disadvantage, others may still worry that 18-year-olds could spend the cash unwisely as soon as they gain access. That’s why anyone starting a JISA for their child should consider stressing the importance of using the funds for what they have in mind (such as a house deposit or university).

How safe is a Junior cash ISA?

Cash JISAs are covered under the same deposit protection scheme that covers the adult savings market, which means that with most UK providers, up to £85,000 will be protected per person per banking group (the scheme is slightly different for stocks & shares JISAs, where the protection only extends to the first £50,000 held with the investment institution). Non-UK providers will usually have a similar scheme, so a similar amount will be protected. Click on the Details button in the chart above to see what protection the provider you’re interested in has to offer.

Who controls the Junior ISA?

As stated, the parent or guardian controls the JISA until the child turns 16, but even then the child won’t be able to withdraw the money in the fund until they turn 18. They would, however, be able to transfer their funds over to a different Junior ISA provider from the age of 16 if they wanted to.

Who can pay into a Junior ISA?

Once opened, anyone can pay into a JISA, and most accounts allow unlimited additions. So, if the grandparents or family friends want to gift some cash to your child, they're welcome to put some money directly into the child's ISA. Indeed, this flexibility may be one of the best reasons to open a Junior ISA.

What is the Junior ISA allowance and how does it work?

The JISA allowance means that in the 2018-19 tax year (which runs from 6 April 2018 to 5 April 2019) you can save or invest up to £4,260 in a Junior ISA.

You can save for your child either in a cash JISA, a stocks & shares JISA, or a combination of the two. For example, you could put £2,130 in a cash JISA and the same £2,130 in a stocks & shares JISA (or any other split), and then invest a similar amount again next tax year, depending on that year's allowance.

Remember that stocks & 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.

Children aged 16-17 can have both a junior cash ISA and an adult cash ISA or Help to Buy ISA. In the 2018-19 tax year, this means they have a Junior ISA allowance of £4,260 as well as the adult ISA allowance of £20,000 to take advantage of.

Why pick 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, these accounts may seem at first glance rather similar.

One big benefit is that the money in a child's ISA cannot be accessed until they turn 18, putting it out of temptation's reach. This means that the money truly can be saved for important things such as university or a first house, rather than being spent before your child leaves the nest.

You shouldn't forget about the tax advantages completely, either. While children generally don't have an income, some proactive teenagers may make enough to have savings tax become a problem outside of an ISA. Additionally, 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 in interest, while Junior ISAs are exempt from this rule.

Can I transfer from a children's savings account into a Junior ISA?

Not directly, but you can use money saved in a children's account to pay into a JISA, provided that the pot that you're looking to transfer doesn't exceed the yearly JISA allowance.

Is it possible to open multiple ISAs for one child?

You can only have one cash JISA and one stocks & shares variety per child. This is unlike adult ISAs, which only allow you to open one per tax year, but otherwise don't have restrictions on the number of such accounts that you can have.

What happens to a Junior ISA when the account holder turns 18?

When your child turns 18, any JISA or Child Trust Fund will automatically become an adult ISA. Ask your provider which kind of adult ISA your account will turn into.

How do I pick the best Junior cash ISA?

Considering that most cash JISAs are rather similar, as you can see above, you could simply pick the one with the highest rate. Pay attention to the account management options as well, however, as you'll want to make it as easy as possible for other people to add to the child's ISA.

Due to the nature of these accounts, you should also easily be able to switch over to a different deal if you find an account that pays a better rate. To make sure you keep taking advantage of the best junior ISA rates, consider reviewing the account's interest rate once a year.

What next?

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