If you're weighing up how to start saving for your child, you could open a junior ISA (JISA) in their name or save for them in your adult ISA.
Find out how these two types of ISA compare so you can decide what's best for you and your child.
An overview of junior ISAs and adult ISAs
JISAs and adult ISAs are both tax-exempt accounts, which means no matter how much they grow by, there’s no tax to pay when you take money out.
The obvious difference is that junior ISAs are aimed at children while adult ISAs are made for adults, but since you can choose to use either, or both, products to save for your child, it’s important to recognise their other differences.
| Junior ISAs | Adult ISAs | |
|---|---|---|
| Who is it meant for? | Children under the age of 18 who don't have a child trust fund (children must be under 16 to be eligible for a OneFamily Junior ISA) | Anyone 18 years old or over can open either a cash ISA or a stocks and shares ISA. |
| Who can access the money and when? | Only the child and only when they turn 18. | The person who opened the adult ISA, at any time. Different withdrawal rules may apply between types of adult ISA. |
| When does it mature? | When the child turns 18, their JISA becomes an adult ISA. | It doesn’t. An adult ISA can be held indefinitely. |
What are the similarities between junior ISAs and adult ISAs?
JISAs and adult ISAs share two key similarities:
1. They're both tax-exempt
You won’t pay any tax on the the money withdrawn from either a JISA or an adult ISA, no matter how much your money has grown.
2. They can both be held in cash or stocks and shares
You can even open a cash and a stocks and shares JISA for the same child, and as many cash or stocks and shares adult ISAs for yourself as you like. But just be aware that the annual JISA/ISA allowance applies to the person, not each ISA.
Cash junior ISAs and adult ISAs
Cash ISAs grow by building interest, like other savings accounts do. Your money isn't invested, so can't go down, but it might not go up as quickly as the cost-of-living increases, so money kept in cash might be able to buy less in the future than it can now.
Stocks and shares junior ISAs and adult ISAs
Stocks and shares ISAs invest your money in investment funds. This gives them good potential to grow, especially over the long-term, and compared to cash ISAs. In fact, in every 5-year period between 2000 and 2021, stocks and shares have out-grown interest rates*. But the value could go down as well as up and there is a risk that you could get back less than you've paid in.
What are the differences between junior ISAs and adult ISAs?
1. How much you can save
JISAs have an annual allowance of £9,000 - this is how much you can put into JISAs in a child's name each tax year. You can put up to £20,000 each tax year into adult ISAs. The tax year resets every 6 April.
2. Withdrawal rules
You can’t withdraw any money from a JISA until it matures when the child turns 18. Even then, the only person who can withdraw the money is the child the JISA was opened for.
You can withdraw money at any time from an adult ISA.
3. How you manage the account
Only someone with parental responsibility can open a JISA for a child under 16. They'll then manage the JISA until the child takes over, but they can't withdraw any money.
The child can take over managing their account when they turn 16 and can move money from 18.That's when the JISA matures.
If you open an adult ISA, you’ll manage your own account from the time you open it. Unlike JISAs, adult ISAs don’t have a time limit and can stay open indefinitely.
4. Who can open the account
You can only open a JISA for a child under 18 (under 16 for a OneFamily Junior ISA) who doesn’t already have a child trust fund. The money is locked in for your child until they turn 18, so there’s no risk of dipping into it and it gives you time to help your child learn about the importance of saving and money management.
Anyone 18 years old or over can open an adult ISA, either cash or stocks and shares.
You can't transfer your ISA to your child
However, you can withdraw money from your own ISA and put up to £9,000 into your child’s JISA each tax year. This will count towards our child's £9,000 annual allowance.
This could be a good way to save for a future child, as you can’t open a JISA for a child before they’re born.
What’s the best option for me and my family?
Ultimately, it’s up to you!
Junior ISAs are specifically intended for you to save for your child from birth until they turn 18.
You can put money aside for a child in your own ISA either instead or as well and this has the advantage of being accessible if you need it as well as having a higher allowance. But it leaves you with less ISA allowance for yourself and the locked-in nature of a junior ISA can remove temptation.
What would you like to do next?
Find out more about junior ISAs
Our guides contain everything you need to know to about investing for your child's future in a junior ISA.
Transfer to OneFamily
Transferring a child trust fund or junior ISA from another provider to OneFamily is simple and we don't charge you to do so.
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.
