Junior ISAs are the latest way to save for your child’s future; enabling them to get a head start in life.
They have been introduced for children born before and after the Child Trust Fund (CTF) was available, and allow you to save and invest £4,080 (2016/2017 tax year) tax efficiently towards your child’s future. You can invest in Cash or Equities, or a combination of both. Parents and legal guardians are able to make investments into a Junior ISA, but anyone can contribute especially grandparents. Once the child turns 18 they will be able to access the money, or let it roll-over into an adult ISA.
Who can get a Junior ISA?
Your child can have a Junior ISA if they:
- Are under 18.
- Live in the UK.
You can’t have a Junior ISA as well as a Child Trust Fund. If you want to open a Junior ISA ask the provider to transfer the trust fund into it.
How Junior ISAs work?
There are 2 types of Junior ISA:
- A Cash Junior ISA, e.g. you won’t pay tax on interest on the cash you save. (TQ Invest don’t currently offer Cash ISAs).
- A Stocks and Shares Junior ISA, e.g. your cash is invested and you won’t pay tax on any capital growth or dividends you receive.
- Your child can have one or both types of Junior ISA.
Parents or guardians with parental responsibility can open a Junior ISA and manage the account, but the money belongs to the child.
The child can take control of the account when they’re 16, but can’t withdraw the money until they turn 18.