A Christmas JISA: The Gift that Keeps on Giving

POSTED ON Monday, 14 December, 2020

The toys on the most-wanted Christmas year are the usual: Legos and Barbies and cuddly toys dominate the top-ten list. But one gift that fails to make it onto kids’ “Dear Santa” List is a JISA. A Junior ISA is a gift which will keep on giving – gaining interest in the years to come. But what is it – and how do you get one? Our elves have put together a quick blog to let you know all the details. 

Very few children will have a JISA at the top of their Christmas list – but we think that they should. A Junior ISA is an excellent tax-efficient way for parents to put money aside to help give your child or children a solid start in life.

While a toy might be the more exciting package to find under the Christmas tree, in a few years it will likely be a long forgotten relic of the terrible twos or threes which is simply gathering dust in the attic. A JISA, while arguably less shiny and visually stimulating, is of far better long-term value and might be a good idea as a gift for a child – be it your own or belonging to a friend or family member.

What is a JISA?

A Junior ISA is an ISA which is set up by the parents or guardian for the child; it’s a type of Stocks and Shares ISA which enables you to put money into your child’s name. This gives your child an established stock-free savings fund in their own name, giving them a leg up into the stock market.

These are investment accounts where the money is invested, and the capital gains made on returns from the investments are tax-free, because these are kept within the tax-free ISA wrapper.

This way, your child’s JISA savings have access to a wider range of investment types, such as equity funds and investment trusts.

Great, so what do I need to know?

If you want a JISA for your child, there are some key factors you need to know before you start researching providers.

Some key rules include:

  1. You can open a Junior Investment ISA if your child is under 18 and a resident in the UK.
  2. Only a parent or guardian can open an account for a child.
  3. Anyone can put money into the account – grandparents, friends, cousins alike.
  4. You can open both a Junior Stocks and Shares ISA and a Junior Cash ISA for your child – but if you are putting money into both, you need to keep this amount below the annual limit.
  5. Your child won’t have access to the money until they are 16. At this point, they’ll be able to manage the funds, and they’ll be able to withdraw the funds/sell the investments when they are 18.

How do I open a Stocks and Shares JISA?

  1. You can chose to open a JISA in your child’s name – the account can only be opened by a parent or guardian. The majority of JISAs can be opened with a deposit of only £1, so getting started with this form of saving is very easy. Some providers enable you to open your account online, so this will minimise fuss.
  2. How much can I invest?
  3. Like all ISAs, there is a cap on how much you can put into this account which is applied each tax year.
  4. For tax year 2020/2021, you can invest up to £9,000 into any Junior ISA account.

Will it cost me anything?

If you are thinking of opening a Junior Investment ISA for you child, you need to be aware of any costs you might incur as these might decrease the returns you can expect from your child’s account.

  1. Although the fees charged will vary from provider to provider, the majority will charge the following:
  2. Transfer charges
  3. Dividend investment fees
  4. Buying charges
  5. Selling charges
  6. Fund switch charges
  7. Bid/offer spread
  8. Fund managers charges
  9. Platform charges
  10. Transfer out fee

Read more about Junior ISAs and Junior ISA options.