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Junior ISA (JISA) – Do you trust your teen?

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

This all sounds great. However, there is a catch: 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? So the question you’ve got to ask yourself is: do you trust your teen?

This JISA 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.

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.

What is a Junior ISA (JISA)?

A Junior ISA (JISA) is a tax-free savings or investment wrapper designed to allow parents to save for children. It is similar to a regular 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Any money saved or invested is locked away and cannot be withdrawn until your child reaches 18.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. Other options may be more appropriate.

Junior ISA at a glace

  • Designed specifically for children’s savings
  • All interest and gains are tax-free
  • Children under 18 are eligible
  • 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
  • Child can take control when 16, but can’t withdraw the money
  • 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 traditional 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.

Alternatively, a Junior Stocks and Shares ISA allows you to invest in stocks and shares. Investing carries more risk but potentially greater reward.

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 (JISA) allowance for 2022/23?

You can invest a maximum of £9,000 per child in a Junior ISA for the tax year 2022/23. 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 up, 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 (JISA) count towards my ISA allowance?

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

For example, 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 for the child. This means parents cannot withdraw it.

Check out all the detail at the Junior ISA .gov website.

Who can open a Junior ISA (JISA)?

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

Opening an account if the child was born after January 3rd 2011 is simple and straightforward:

  • decide on 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

For an under-18 born before 2011, they would have had a Child Trust Fund (CTF) opened for them by the government. These can be converted to a JISA usually with better rates. Learn more about converting a CFT to a JISA here.

Children aged 16 and 17 can open their own Adult ISA (but not Stocks and Shares) as well as a Junior 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 (JISA)?

Anyone can pay money in. This makes a Junior ISA 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 this 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 at least 16. At 16 a child can take over management of the account (but can’t withdraw).

Crucially though, this all changes when they hit 18. At this point, control and the ability to withdraw the money 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. However, you can transfer a JISA between providers if you find better rates or products.

The only exception is on medical grounds:

If your child falls terminally ill or dies, the registered contact can withdraw the money. If you are in this incredibly unfortunate position, details of how to do this 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 shows how parents can start saving for their child(ren). Then, if children take over control and continue to invest into adulthood, they can reach financial greatness, and quickly. 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. And that’s totally fine.

You may not be using all of your own personal ISA allowance of £20,000. So, you could consider investing some money for your child within your own tax-free wrapper. Adults can have both a Cash ISA and a Stocks and Shares ISA, so there is plenty of choice.

Then, 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.

In this scenario, the drawback is that you consume your own personal allowance. However, if you are already putting in far less than £20,000 then this may not be necessary to consider. Remember, ISAs are Individual Savings Accounts. If you are a couple, you each get a  £20,000 allowance.

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 easily be set up 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. They come in two flavours:

  • Robo-advisors – these platforms help choose and manage your investments. Suitable for new or hands-off investors.
  • DIY platforms – you choose exactly what you want to invest in. Suitable for more experienced or hands-on investors.

Junior Stocks and Shares ISA - Best Robo-advisor platforms

Below is a list of the most popular robo-advisor platforms that offer Junior Stocks and Shares ISAs.

Provider Annual Charge Min Investment Cost per trade
Nutmeg (review) 0.75% £500 included
Wealthify (review) 0.60% £1  included

A robo-advisor platform will help invest money for your child based on your long term goals. Typically, robo-advisors ask a series of questions to assess your appetite for risk. After this, you’ll be offered some suggested investments. From this point forward, all you need to do is pay money in and everything else is taken care of.

Special offers:

Nutmeg will give you six months of fee-free service if you invest at least £500. Use this link to claim the offer.

Wealthify will give your child £25.00 if you invest at least £250 for six months. Use this link to claim the offer.

Junior Stocks and Shares ISA - Best DIY Platforms

Below is a list of the most popular DIY investment platforms that offer Junior Stocks and Shares ISAs.

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 popular 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. Therefore, 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 FSCS protection covers up to £85,000.

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

Be aware: The FSCS does not provide protection against losses from investments such as 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 Cash ISA. This means children and parents can contribute to both between the child’s 16th and 18th birthday. So, for that two-year window, this gives your child a £29,000 ISA limit.

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

Junior ISA Summary

Investing in your children’s future can give them a financial boost when they really need it. It could be a helping hand with education costs, buying a car or getting on the property ladder. That is, of course, if this is what you want to do.

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, perhaps consider other alternatives.

If you want to see how much of a head start you could give your child, check out How to become a millionaire – the surprisingly easy way.

Join our FREE UK Personal Finance Club on Facebook. It’s full of other parents trying to make the same decisions and benefit from the power of ‘group thinking’. It’s a private and positive community designed to keep you on your financial A-game. I’d love to see you there.

Here’s to Financial Fitness

EatSleepMoney.co.uk 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.

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