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Junior ISA – Do you trust your teen?

10–12 minutes to read

A Junior ISA allows you to invest in your child’s future, giving them a much-needed financial boost. It that could open doors to them that were otherwise closed, help them get on the property ladder or buy their first car.

This all sounds great but your child takes full control of the cash at 18 years old. What is an 18-year-old going to do with the savings you’ve worked hard to squirrel away? The question you’ve got to ask yourself is: do you trust your teen?

This guide takes you through all the key benefits and considerations when deciding if a Junior ISA is right for your child.

Want to know everything about ISAs and the other types available? Check out our Ultimate ISA Guide To Powerful Tax-Free Savings.

What is a Junior ISA?

A Junior ISA or JISA is a tax-free savings or investment wrapper designed to allow parents to save for children. It is similar to an adult ISA, however, your savings limits are more restricted.

Any money saved or invested is locked away and cannot be withdrawn until your child reaches 18. At that point, the money is theirs to do with as they please.

And that’s one of the biggest considerations: Do you want your child to have full control of this money at 18? If your answer is ‘no’ or you are unsure, then a Junior ISA may not be for you.

How to save for your children’s future – Check out our guide

Heads up – We aim to produce honest and accurate content, however, we are not financial advisors. If you need financial advice, Unbiased can connect you with a suitable professional for free. Some of our links may earn us a small commission to help us run the site.

Junior ISA at a glace

  • Designed for children’s savings
  • All interest and gains are tax-free
  • Must be under 18 to open
  • Up to £9,000 per year can be saved per child
  • Not part of the parents ISA allowance
  • Grandparents can contribute
  • Cash or Stocks and Shares variants
  • Converts to adult ISA at 18
  • FCSC protected
  • The child can withdraw money at 18
  • Parents cannot withdraw money

Types of Junior ISA

Like adult ISAs, Junior ISAs come in a few different flavours:

  • Junior Cash ISA
  • Junior Stocks and Shares ISA

Like their adult counterparts, they open up different savings options.

A Junior Cash ISA most closely resembles a savings account with a fixed interest rate. The rates may change over time so you may want to consider chopping and changing as other financial institutions offer better rates.

A Junior Stocks and Shares ISA allows you to invest in stocks and shares. Investing carries more risk but potentially more reward. What you invest in is usually down to the parents meaning you take on the risk. Not sure about investing? Read our Beginners Guide to get you started.

You can open and hold both types for your child, however, you cannot exceed the annual Junior ISA allowance across the two.

What is the Junior ISA allowance for 2021/22

You can invest a maximum of £9,000 per child in a Junior ISA for the tax year 2021/22. That’s a whopping £750 per month!

Unlike other ISA allowances, the Junior ISA limit increased a few years ago from £4,368. This was a big jump which means it’s probably unlikely to increase for some time.

Contributions can be added monthly or in lump sums but must stop when the child reaches 18.


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Does a Junior ISA count towards my ISA allowance?

A Junior ISA actually comes out of your child(s) tax allowance, not your personal £20,000 allowance.

This means an adult could save £20,000 per year in their own wrapper, plus an additional £9,000 per child. Of course, money invested into a Junior ISA is the child and parents cannot withdraw this.

Who can open a Junior ISA?

Parents or guardians with parental responsibility can open and manage the account for children under 16.

To open an account you need to:

  • choose the type of Junior ISA you want for your child – Cash, Stocks and Shares or both
  • choose your account provider (see below)
  • fill in an online application form

Children aged 16 and 17 can open their own Junior ISA as well as an adult Cash ISA. Children aged 16 also have a full £20,000 ISA allowance but remain limited to how much they can save in their Junior ISA.

Who can pay into a Junior ISA?

Anyone can pay money in making it ideal for grandparents, family & friends wanting to help out.

The total amount paid in cannot go over the annual limit for the tax year so ensure you discuss amounts with anyone wanting to contribute.

Who does the money belong to?

Regardless of who puts money in, it all belongs to your child whatever their age. You cannot get this money back so consider carefully before putting any money in.

In addition, even though they technically own the money, they cannot access it on their own.

Parents or guardians are responsible for opening and managing the account until the child reaches 16. At 16 a child can take over management of the account.

Crucially though, this all changes when they hit 18, at which point control and the ability to withdraw is in the hands of the child.

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Can I withdraw Juniour ISA money early?

Most parents will not be able to withdraw Junior ISA money early. You can transfer it between providers as you find better rates or products.

There are exceptions that allow you to withdraw money.

If your child falls terminally ill or dies the registered contact can withdraw the money. If you are in this incredibly unfortunate position the details of how to withdraw money can be found here.

What happens to a Junior ISA at 18?

When a child reaches 18 their Junior ISA “matures”. The money can either be paid to the child or converted into an adult ISA.

This is the point at which your parenting skills are tested to their limits! Will they choose wisely and continue to save or blow it all on life in the fast lane?

Our article on How to become a millionaire – the surprisingly easy way demonstrates how parents can start saving and if children continue this trend into adulthood, they can reach financial greatness. It’s worth a read to demonstrate to your child the power of saving over time.

An alternative to a Junior ISA

The main disadvantage of a Junior ISA is that your child will get free reign over all of the money at 18. Parents who are struggling to decide if they will trust their future kid’s responsibility and resolve may want to consider alternatives.

If you are not using all of your personal ISA allowance of £20,000, you could consider investing your child’s money within your own tax-free wrapper. Adults can have both a Cash ISA and a Stocks and Shares ISA so your choices are not limited.

You can then gift the money to them at a time you feel is right, whenever that may be. You don’t even have to gift all of the money in one go. The point is, you have control.

The drawback is that you consume your own personal allowance. However, if you are already putting in less than £200,000 or are a couple and as such have a combined £40,000 ISA allowance, then this may not be necessary to consider.

The downside is that if something happens to you as a parent, without a will, your money may not end up in your children’s hands. A will can be set up easily to cover these occurrences by using an online will writing service.

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Where to get a Junior ISA

You can get a Junior Cash ISA from most high street banks & building societies. For the most up to date best buy table click here.

Junior Stocks & Shares ISAs are a bit harder to come by. If you invest in your own Stocks and Shares ISA you will recognise some of the names below:

Provider Annual Charge Min Investment Cost per trade
Interactive Investor (review) FREE* £100 £0.00**
Hargreave Lansdown (review) 0.45% £25 £0.00**
Fidelity (review) FREE* £25 £1.50**
Vanguard (review) 0.15% £100 £0.00

*Free to existing account holders

** Cost of regular investing (for example a monthly investment into a fund)

The table highlights some common providers however others are available. Before choosing a provider, consider how often you will invest and how much. It is also worth considering if you will buy individual stocks or funds.

When investing for your children, you have an 18-year time horizon. Money invested in a Junior ISA cannot be withdrawn and so it’s particularly suited to investing and riding out inevitable bumps along the way.

If you’d like to learn more about investing then check out our article Investing for Beginners – How to bankroll your financial freedom.

How safe is my money in a Junior ISA?

Money contributed to a Junior ISA is protected by the FSCS. The protection is different for each type of Junior ISA:

  • Junior Cash ISA – Protected up to £85,000
  • Junior Stocks and Shares ISA – Protected up to £50,000

FSCS protection applies per institution and per individual, so if you have two or more children they would be protected individually.

Be aware: The FSCS does not provide protection against losses from investments like a stock market crash.

How to get extra allowances for your child

You can keep contributing to your child’s Junior ISA until they reach 18. However, at 16, your child can also open an adult ISA. This means children and parents can contribute to both between the child 16th and 18th birthday. This gives your child a £29,000 ISA limit for 2 years.

It’s a neat trick to start filling your child’s allowances and kick start their financial future. For most of us, taking advantage of this trick is going to be pretty hard.

Sub heading

Investing in your children’s future and helping your child with educational costs, buying a car or getting on the property ladder will give them a major advantage. Given the time horizon of a Junior ISA, they are particularly well-suited for investing in stocks and shares. However, if relinquishing control at 18 is a concern and you have the personal tax allowance headroom, consider other alternatives.

Still not sure? Come join our FREE UK Personal Finance Club. Join other parents trying to make the same decisions. Why not benefit from some ‘group think’. It’s a private positive community designed to keep you on your financial A-game. I’d love to see you there.

Here’s to Financial Fitness does not offer financial advice and is intended for reference/information only. Remember, you should always carry out your own research and/or take specific professional advice before choosing any financial products or services or undertaking any business or financial venture. If you need financial advice Unbiased can connect you with a suitable professional for free. Investments may go up as well as down and you may get back less than you put in.