Child trust funds (CTFs) and junior ISAs (JISAs) are both designed to help you save for your child’s future.
You can't open a CTF anymore, but you can transfer one to a JISA. If you're thinking about doing so, it's worth being aware of how they differ.
| Junior ISAs | Child trust funds | |
|---|---|---|
| Who can open the account? | A parent or legal guardian | You can't open a new child trust fund. All eligible children would have had one open for them, either by their parents or by the government. |
| Who can have one? | Any child under 18 (under 16 for a OneFamily Junior ISA). | Any child born in the UK between 1 September 2002 and 2 January 2011. |
| Does the child receive money from the government? | No. | Parents of eligible children would have received a voucher from the government to open the account with. |
| What's the annual contribution period? | Resets at the end of the tax year. | Resets on the child's birthday. |
| How does the account mature? | When the child turns 18, the account becomes an adult ISA. | When the child turns 18, the account becomes a matured child trust fund. |
What are junior ISAs and child trust funds?
Junior ISAs (JISAs) and child trust funds (CTFs) are different types of accounts for children. Money put into a child's CTF or JISA can only be accessed by the child and only when they turn 18.
CTFs were a scheme started by the UK government. Children born between 1 September 2002 and 2 January 2011 were given a voucher to invest in a CTF. Parents could choose which CTF to put the voucher into, but if they didn’t choose then one was automatically opened for the child.
JISAs replaced CTFs when the scheme finished. You can still open a junior ISA for a child or you can transfer a CTF into a JISA. You must have parental responsibility to open a JISA and the child must be under 16 for a OneFamily JISA. Children can't have both a CTF and a JISA at the same time.
What are the similarities between junior ISAs and child trust funds?
Besides both being tax-efficient ways to save for your children, JISAs and CTFs share many similarities.
- They mature at the same time
For both JISAs and CTFs, the money will be locked in for the child until they turn 18. They can take ownership of their account when they’re 16. - They have the same annual contribution limit
You can put up to £9,000 into either a CTF or JISA each year. For CTFs, the limit resets on the child's birthday. However, JISAs run tax year to tax year, so the limit resets each April. - They can both be either cash or stocks and shares products
Money that you put into stocks and shares JISAs and CTFs goes into funds, which are invested in the stock market. This type of investment has good potential to grow over the long-term. But the value of your money could go down as well as up, so your child could get back less than has been paid in.Cash JISAs and CTFs, on the other hand, aren't invested in the stock market so any money you put in is protected. Instead, it'll will grow based on interest rates. However, if inflation is higher than interest rates, money in a cash JISA or CTF could be worth less in the future. - They’re both tax-efficient
No matter how much your money grows while it's in a JISA or a CTF, your child won’t pay any tax when they access the money.
What are the differences between junior ISAs and child trust funds?
- They mature differently
Both CTFs and JISAs mature when the child turns 18, but the way they mature is different.When a CTF matures, it becomes a "matured CTF". Whereas when a JISA matures, it becomes an adult ISA. You can leave some money in a junior ISA and reinvest or withdraw the rest. But you have to move everything in a child trust fund at once, although you can leave it all where it is while you decide on your options.
- Child trust funds were part of a government scheme
When parents or the government opened a CTF, they would have started it with a voucher, usually for £250.Some children received different amounts depending on factors such as their family's financial situation, any disabilities or when they were born – children born towards the start of the scheme generally received a higher amount.
Junior ISAs, on the other hand, are not given any government money (there are some exceptions for children in care).
- The annual limit resets at different times
As mentioned above, the way the limit resets differs. Both products have a limit of £9,000 you can put in each year. However, while this resets on the child's birthday for child trust funds, it rests at the new tax year (6 April) for junior ISAs.
Should I transfer my child’s child trust fund to a junior ISA?
While child trust funds and junior ISAs are both tax-efficient ways to help save for your child’s future, they have some differences that might be worth considering.
Different providers might also offer different options, such as cash or stocks and shares and, in the case of stocks and shares, different investment fund options to choose from.
You can't open a new CTF for your child, but you can open a JISA for them. If your child has an existing CTF, you can transfer it to a JISA. You can also transfer a CTF to a different provider.
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.
