Junior ISA Online Associated
 
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What are Junior ISAs?

Junior ISAs are tax-efficient investment and savings accounts for children.

Once parents open a Junior ISA for their child anyone, friend or family, is able to make a contribution up to the annual limit.

Decisions on where and when to invest ISA contributions are made by the child's parents but the account is held in the child's name. The money is ring-fenced for the child until they are 18 – no withdrawals are permitted before then except in the event of terminal illness or death.

While the savings and investments are in the Junior ISA there is no capital gains tax and no further income tax to pay.

When the child reaches 18 their account is automatically converted into an 'adult' ISA and they are entitled to full access to their investments and savings.

Who is eligible for a Junior ISA?

Any child resident in the UK who wasn't eligible for a Child Trust Fund (CTF):

  • Children born on or after 3 January 2011
  • Children (aged under 18) born before 1 September 2002
  • Children born between 1st September 2002 and 3rd January 2011 who didn't qualify for a Child Trust Fund will be eligible for Junior ISA's.
How much can I pay into a Junior ISA?

You can contribute up to £4,000 each tax year. A tax year runs from 6 April one year to 5 April the next. Like an adult ISA, this limit will increase with inflation each year. The first inflationary increase is due in April 2013.

Who can open a Junior ISA account?

A parent or guardian can open a Junior ISA for an eligible child.

Can parents access money held in Junior ISA?

No, only the child can withdraw cash from the Junior ISA when they reach age 18, except in cases of terminal illness or death.

Are Junior ISAs different from Child Trust Funds?

Yes, the main difference is that there will be no government contributions to Junior ISA's as there were with Child Trust Funds.

Can Child Trust Funds be transferred to Junior ISA?

No. The Junior ISA is only available to children who didn't qualify for a Child Trust Fund.

If your child has a Child Trust Fund you can continue to make contributions up to the annual contribution limit. From 1 November 2011 the annual contribution limit for Child Trust Funds increased from £1,200 to £4,000.

Tax rules can change and the benefits to your child depend on their individual circumstances. Also the value of investments can fall as well as rise and therefore you could get back less than you invested.

 

   
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