Whether you’ve recently become a parent or just started looking at options for your children, a junior ISA (JISA) can be a great way to give your child financial support at the start of adulthood.
Here’s what you need to know to decide if it’s the right product for you.
1. Junior ISAs are tax-free savings or investment accounts for children
Neither you, nor your child, will have to pay any Income Tax or Capital Gains Tax on the money they take out of their JISA, no matter how much it grows.
2. There are two types of junior ISA: ‘cash’ and ‘stocks and shares’
Cash JISAs hold the money in cash, which means it’s not invested and instead grows by building interest, like a regular savings account. if the interest rate is less than inflation, the spending power of the money you pay in might go down over time.
Stocks and shares JISAs invest the money you pay in into an investment fund, which invests in the stock market. This gives your money a better chance of out-growing inflation, but the value can go up and down so there is a risk the child could get back less than you've paid in (depending on what the stock market is doing when they take their money out).
Find out more: Junior ISA: cash vs stocks and shares
3. Most children under 18 can have a junior ISA
Parents or legal guardians can open a JISA for any child under 18 year old, as long as the child lives in the UK and doesn’t already have a child trust fund. The child must be under 16 to have a OneFamily Junior ISA opened for them.
If your child already has a child trust fund in their name, you can transfer their child trust fund into a junior ISA.
4. Only a child’s parent or legal guardian can open a junior ISA for them
You must have parental responsibility for a child to open a JISA in their name. So, grandparents and other family members can’t open a JISA for a child, unless they’re their legal guardian. But once it's open, anyone can pay in.
5. A child can have both a ‘cash junior ISA’ and a ‘stocks and shares junior ISA’ in their name
You can open two junior ISAs for a child, as long as it's one of each: a cash JISA and a stocks and shares JISA.
But you can still only pay in up to £9,000 a year and this is shared between all the junior ISAs in their name.
6. Anyone can pay into a child’s junior ISA
Friends and family members can all pay money into a child’s JISA. Children can even pay into their own JISAs once they’re old enough to have their own bank account to pay in from.
7. You can pay up to £9,000 into junior ISAs in a child’s name each tax year
The junior ISA annual allowance resets at the start of each tax year, on 6 April.
The £9,000 pay-in limit is per child. Paying into a JISA doesn't affect the ISA allowance of the person paying in. If a child has two JISAs, this limit is shared between both.
7. You can pay up to £9,000 into junior ISAs in a child’s name each tax year
The junior ISA annual allowance resets at the start of each tax year, on 6 April.
The £9,000 pay-in limit is per child. Paying into a JISA doesn't affect the ISA allowance of the person paying in. If a child has two JISAs, this limit is shared between both.
8. Only the child will ever access the money
When you pay money into a JISA, you're giving that child a gift that can’t be taken back.
Even as a parent, you can’t withdraw any money from a JISA that has been opened for your child.
Once they turn 18, their JISA will mature, meaning the money is available to be moved elsewhere and the child becomes the legal owner.
9. Your child can take control when they turn 16
Until the child turns 16, their parent or legal guardian will manage their JISA.
But at 16, the child can take over (if they like).
They’ll be able to manage and keep track of their own account, but they still won’t be able to take any money out until they turn 18.
At 18, they’ll automatically become the Registered Contact and will need to register for their own online account so they can tell us where they'd like to move the money.
10. Junior ISAs don’t affect parents’ benefits eligibility
As JISAs are in the child’s name, they aren't seen as parents' savings. So JISAs aren't taken into account when it comes to means-tested benefits, such as Universal Credit.
However, the money will be taken into account if the child applies for any benefits after they turn 18.
Open a OneFamily Junior ISA
Give your child more options when they reach 18 with our straightforward Junior ISA. Simply choose one of our three climate-focused funds to start investing on their behalf.
Our Junior ISA invests in stocks and shares. The value is therefore likely to go up and down over time.
This is normal for this type on investment, but it means there is a risk your child could get back less than has been paid in if they withdraw at a time when the value is lower.
