Child ISA Account

Child ISA Account

The child ISA is an account that is opened on behalf of a child for investment of his/her savings.

The account is managed by an adult as its registered contact until the child attains 16 years of age and takes over as the registered contact. Before the child attains 18 years of age however, the account is strictly a deposit only account. 

On attaining 18 years, the legal adult age, the child ISA ceases to be that and becomes an adult ISA. The limit on the cash allowance changes and the account holder is then able to withdraw money from the account.

Account details

The account has a variable interest rate that is dependent on the bank or credit institution under which the account is registered.

The account can either be a cash isa or shares and stocks ISA.

There is no tax on the interest gained on the account.

The account has a deposit allowance limit that is set depending on the tax year limit. The limit for the 2021/2022 tax year is £9,000.

Duties of the registered contact

The registered contact is responsible for ensuring that money is deposited into the account through the tax year, as long as it does not exceed the allowance limit.

The registered contact is responsible for updating any information that pertains to the child and is relative to the account. Such information includes a change of name, developing a terminal illness or death.

The registered contact has a duty to change the bank or credit institution under which the account is registered. The transfer follows a similar procedure to that of an adult ISA.

Instances where the registered contact can withdraw from the account

There are special circumstances under which the registered contact can be granted full access to the account, including the ability to withdraw from it. The first circumstance is in the event of the death of the child. The registered contact is required to close the account and provide proof of death in the form of legal documentation, that is, a death certificate.

Another circumstance is when the child is diagnosed with a terminal illness. A terminal illness is one which cannot be treated and under which the child cannot survive more than six months.

Special restriction

A child ISA cannot be opened concurrently with a child trust fund. If the child has a trust fund, then it has to be closed before the ISA can be opened. Money from the fund can then be placed into the ISA.