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6th
Feb 2020
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What are Junior ISAs?

What are Junior  ISAs?

Most parents want to encourage their children to save - and to put some money aside for when their first big independent expenses start rolling in: buying a car, going off to college or university, setting up home on their own. 

What is a JISA?

A JISA is a long-term, tax free savings account for children which is exempt from the tax allowance of the parents. In order for you to set up a JISA for your child, they need to be under 18 and live in the UK.

This means that any returns on the investment or interest gained from these accounts roll up tax free, meaning that this will maximise the amount of money you can squirrel away for your child.

There are two main types of JISA:

  • A Cash Junior Junior ISA: This account is a simple savings account where the capital gains made on interest is tax-free. Interest rates tend to be a bit lower on these than Stocks and Shares ISAs.
  • A Stocks and Shares Junior ISA: This account is an investment account where the money is invested and the capital gains made on returns from the investments are tax-free. The interest rates tend to be higher on these, but they are slightly higher risk than Cash ISAs.

Who can set these up?

These can be opened by parents or guardians for a child of any age and can be contributed to by anyone – so if friends or family want to put some money in, they are able to do so.

So instead of your child unwrapping piles of plastic bricks (which you will inevitably end up standing on), gift givers can instead put some money into the account to invest for the future.

This is a really sensible long-term way to approach gifting – and avoiding unwanted toys strewn on the living room carpet.

The opener of the account – the parent or guardian – is the individual who looks after the account while the child is still a minor. After the child is age 16, they have access to manage the account, but cannot access the money until their 18th birthday.

How much can I put in?

Like other ISAs, there is a cap on the amount that can be put in these accounts. The financial cap on how much you can put in an account in one year will be changed depending on the set cap from that year.

The cap for tax year 2019/2020 is £4,368 per year.

How much benefit does a JISA have?

Let’s say you open a JISA account when your child is two with a view for it to pay for their university fees.

Assuming that you put in the £4000 amount each year, that comes to a total of £64,000 before your child turns 18.

This more than pays for their university fees, their maintenance during university, any potential postgrads as well as a chunky amount left over to kick-start their first home fund. And that’s before you add interest on top.

JISAs can provide your child with some financial support when they are facing expensive times of life – such as educational fees, living costs or giving them a head start on saving for their first property. So if you have the money to invest, it is a tax efficient way to put finances aside to give them a helping hand.

Click here to see great options for Junior ISAs. 

Junior ISAs

Junior Stocks & Shares ISA

from Fidelity

Regular Savings
  • Investment Options: Over 4,000 investment options, including funds, shares, investment trusts and exchange-traded funds

Why we like it: Fidelity’s guidance service makes it easy to find investment ideas for your child’s savings, plus Fidelity don’t charge a service fee on junior accounts meaning you keep more of your investment for your child. Ongoing fund charges and other fees may apply.

Important: The value of investments can go down as well as up so you may get back less than you invest. The value of tax savings and eligibility to invest in a Junior ISA depend on personal circumstances. All tax rules may change in future. Withdrawals from a Junior ISA will not be possible until the child reaches age 18. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser.

Junior Stocks and Shares ISA

from Hargreaves Lansdown

Regular Savings
  • Investment Options: Invest from £25 per month or deposits of £100.

Why we like it: Invest for your child from £25 pm tax free. A wide range of top performing funds to choose from. The annual charge for holding investments in a Hargreaves Lansdown Junior ISA is never more than 0.45%. Your dealing and other charges will depend on the investments you choose.

Important: The value of your investments can rise as well as fall. You may get back less than you invested. If you’re unsure, we recommend you ask for independent advice.

My Select Junior ISA

from Scottish Friendly

Regular Savings
  • Investment Options: Invest from £10 a month or a £50 deposit

Why we like it: Invest tax-free from £10 a month or a £50 lump sum — or a mix of both. You can raise, lower, stop and restart your payments any time you like. Offers a selection of eight funds to choose from, so you can tailor your child's investment.

Important: The value of your investments can rise as well as fall. You may get back less than you invested. If you’re unsure, we recommend you ask for independent advice.

Important Risk Information:

The value of investments can go down in value as well as up, so you could get back less than you invest. It is therefore important that you understand the risks and commitments. This website aims to provide information to help you make your own informed decisions. It does not provide personal advice based on your circumstances. If you are unsure of how suitable an investment is for you, please seek personal advice.

High Income ISAs

High income ISA ideas:

ISAs Products

Cash ISAs

Fixed Rate & Instant Access ISAs:

Cash ISAs: 

Stocks & Shares ISAs

Types of Stocks and Shares ISA include: 

Stocks and Shares ISAs

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