It’s never too early to start thinking about your child’s future, and as you would with any other investment, it is important to think of the safest ways to save for your child.
Junior ISA’s are tax free savings accounts for the under 18’s. They can save up to £4,128 this tax year. They then remain tax free until the child’s 18th birthday when it gets converted into an adult ISA.
A Child Trust Fund (CTF) is a long-term tax-free savings account for children. All children eligible for a CTF account should now have them. If your child was born between 1 September 2002 and 2 January 2011 and eligible for Child Benefit, you should have received a Child Trust Fund voucher from the Government.
The CTF voucher was an amount of money that the Government gave eligible children and could only have been used to open a Child Trust Fund account. New accounts cannot be created but existing accounts can receive new money. They have been replaced by a Junior ISA.
The Junior ISA.
Junior ISAs were introduced on 1 November 2011. Like adult ISAs, JISAs are available in both cash and stocks and shares types. Money cannot be withdrawn until age 18 unless a terminal illness claim is agreed or following closure of the account after the death of the child.
They are available to those who are:
- under age 18 and
- were born on or after 3 Jan 2011 or do not have a CTF account, and
- are resident and ordinarily resident in the UK, or are a UK Crown servant, married to or in a civil partnership with a Crown servant, or a dependent of a Crown servant.
How Junior ISAs work
There are 2 types of Junior ISA:
- a cash Junior ISA, ie you won’t pay tax on interest on the cash you save
- a stocks and shares Junior ISA, ie your cash is invested and you won’t pay tax on any capital growth or dividends you receive.
Your child can have 1 or both types of Junior ISA.
You can get a Junior ISA from a range of banks, building societies, credit unions, friendly societies and stock brokers.
Contact any of these direct for more information about how you can open a Junior ISA with them.
Since April 2015 a Child Trust Fund can be converted into a Junior ISA.
Who the money belongs to
Money in a Junior ISA belongs to your child and can’t be taken out until they’re 18, though there are exceptions to this.