How does a junior cash ISA work? (2024)

How does a junior cash ISA work?

A Junior Cash ISA is similar to a bank or building society savings account although the money is locked in and cannot be withdrawn until age 18. But Junior Cash ISAs come with one big advantage – your child doesn't have to pay tax on the interest they earn on their savings, and you don't have too either.

What are the disadvantages of a junior ISA?

The money invested in a stocks and shares junior ISA is affected by changes in the stock market. This means the value of your investments could go down as well as up, so your child may get back less than has been put in.

What are the rules for a junior ISA?

Your child can have one or both types of Junior ISA. Parents or guardians with parental responsibility can open a Junior ISA and manage the account, but the money belongs to the child. The child can take control of the account when they're 16, but cannot withdraw the money until they turn 18.

How do I get my money from Junior ISA?

The money in your child's Junior ISA belongs to them so no-one else, even their parent, can access it. They will be able to withdraw the money when they turn 18. The only exception to this is if the child passes away or becomes terminally ill.

Can a parent take money from a junior ISA?

Parents cannot access a Junior ISA or take money out of it even if you are the parent or guardian who opened it.

Are junior ISAs risky?

Junior cash ISAs.

The money is completely safe (provided it's in a UK-regulated provider and you've no more than £85,000 with that financial institution) and you get a defined amount of interest. The only risk is the money won't grow as quickly as inflation.

Do you pay tax on a junior ISA?

Junior ISAs (JISAs) are tax-free savings accounts for children. That means the child won't need to pay any tax on any interest or returns they gain.

Are Junior ISAs a good idea?

Junior cash ISAs tend not to pay the highest rate of interest around but they do offer the benefit that there is no tax to pay ever on the interest earned in the account. They could also benefit parents wanting to cut down their own tax bill.

How much can a grandparent put into a junior ISA?

Children resident in the UK and under the age of 18 are usually able to have a JISA opened for them. While parents or guardians must open the account, parents, grandparents, godparents or family friends can, between them, contribute £9,000 a year to these tax-efficient accounts.

What happens to a junior ISA if the child moves abroad?

As long as the child was a UK resident when the Junior cash ISA was opened, you will still be able to pay into the Junior cash ISA even though you and/or the child have moved abroad.

Can I withdraw money from a junior cash ISA?

No, apart from the right to cancel, money cannot be taken out of the account until the child turns 18. It is however possible to transfer a Junior Cash ISA to a Junior ISA with another provider. For further information, see Can a Junior Cash ISA be cancelled?

How much should you put in a junior ISA?

Current junior ISA annual allowance

The maximum amount you can put into a JISA in the current tax year is £9,000. It has stayed the same since the 2020-2021 tax year. The tax year is the 12-month period that the government uses to calculate taxes and organise finances and accounts.

Can anyone put money into a junior ISA?

Anyone can pay money into a Junior ISA , but the total amount paid in cannot go over £9,000 in the 2023 to 2024 tax year. If your child has £2,000 paid into their cash Junior ISA from 6 April 2023 to 5 April 2024, only £7,000 could be paid into their stocks and shares Junior ISA in the same tax year.

What happens to the money in a junior ISA if the child dies?

If your child dies, any money in their Junior ISAs will be paid to whoever inherits their estate. This is usually one of the child's parents, but it could be their spouse or partner if they were over 16 and married or in a civil partnership.

Can I open a junior cash ISA for my grandchild?

You must be a legal guardian in order to open a junior ISA for a child. It's a great way to save for a young person's future and help them along the road to financial stability.

What is the difference between a junior ISA and a normal ISA?

A Junior ISA, in principle, works much like an adult ISA. Both Junior and adult ISAs come as either Investment or Cash vehicles. The main difference is the tax-free savings allowance: with a Junior ISA, you can save up to £9,000 a year compared to an adult ISA where you can invest up to £20,000 per annum.

Which is better junior ISA or savings account?

Junior ISAs are geared towards long-term saving and giving your child a boost when they turn 18. Since no-one can take the money out before then, they're a better option if you want to build up a lump sum that your child can then use to help them get a head start in their adult life.

What is the difference between a junior ISA and a Child Trust Fund?

A Child Trust Fund was only available to children born between 1^st September 2002 and 2^nd January 2011. A Junior ISA is available to all children. But a child can only have a Child Trust Fund or a Junior ISA, not both.

How much money can you put in a junior ISA each year?

The current annual subscription limit for Junior ISAs is £9,000 (for the financial year 2023/24). This allowance can be split between a cash Junior ISA and a stocks and shares Junior ISA.

How do I avoid inheritance tax on ISA?

The seven-year rule – If the money was paid into the junior ISA seven or more years prior to your death, there will be no Inheritance Tax to pay on it. Normal expenditure out of income - You can make regular payments into a junior ISA out of your net disposable income without it being considered a gift.

Can I have 2 junior ISAs?

A child can have two Junior ISAs (JISAs). They can have one Cash JISA and one Stocks and Shares JISA. JISAs can be transferred between providers, but your child cannot have more than one of each type of JISA at any one time. There is an annual allowance for JISA contributions which is £9,000 per tax year.

What's the best savings account for a child?

What are the best savings accounts for grandchildren?

Can a sibling open a junior ISA?

You can open a JISA as long as you're either the parent or guardian of the child, but the money belongs to the child. This means that you (or any friends and family) can pay money in, up to the annual JISA allowance each tax year, but you won't be able to make any withdrawals.

Can an aunt open a junior ISA?

Although only legal guardians can open a junior ISA for a child, anyone can pay into it, meaning grandparents, aunts and uncles and even family friends can contribute to your child's future.