A Junior ISA is a tax-efficient way to save money for a child, as there is no UK income tax or capital gains tax payable on any returns.
Each tax year, parents, relatives or friends can contribute up to the Junior ISA allowance in either a Stocks and Shares Junior ISA, a Cash Junior ISA, or both. That is, as long as the total savings across these accounts doesn’t exceed the annual Junior ISA allowance.
If you'd like to open a Junior ISA for a child, they must be aged 17 or under.
The account can be set up by a person with parental responsibility for the child, or the child themselves, if they are aged between 16 and 18.
We refer to the person who manages the Junior ISA as the Registered Contact. This could be the person who has parental responsibility for the child. Equally this could be the child themselves if they're 16 or over.
However, while the child may become the Registered Contact at the age of 16, they can’t withdraw any money until they turn 18.
As the child turns 18, the Junior ISA automatically becomes an ISA so that the tax benefits are retained and the child can take full control of the account.
Child Trust Funds were available to children born between 1 September 2002 and 2 January 2011. However, these have now been replaced by the Junior ISA.
As both saving schemes carry tax advantages, it’s not possible to have a Child Trust Fund and a Junior ISA, although some providers will transfer funds from a Child Trust Fund into a Junior ISA.
If you're looking for a tax-efficient way to save for a child and to give them a financial head-start in life once they turn 18, you can find out more about a Junior ISA on our website.
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