What is a Junior ISA ?

A Junior Individual Savings Accounts (ISAs) are long-term, tax-free savings accounts specifically designed for children.

So who can open a Junior ISA ?

Your child must be met the following conditions:

• they are aged under 18
• living in the UK

What if your child lives outside the UK ?

Your child can only get a Junior ISA, if both the following conditions apply:

• you’re a Crown servant (in the UK’s armed forces, diplomatic service or overseas civil service, for example)
• they depend on you for care

So how much money can you contribute into it ?

For the current tax-year (April 2024 – April 2025) the savings limit is £ 9,000 per tax year.

So how does the product work ?

There are 2 types of Junior ISA:

• a cash Junior ISA, for example you will not pay tax on interest on the cash you save
• or a stocks and shares Junior ISA, for example your cash is invested into shares and funds. You will not pay tax on any capital growth or dividends you receive within the product.

Your child can however have one or both types of Junior ISA at the same time.

When your child turns 18, their account is automatically rolled over into an adult ISA . They can also choose to take the money out and spend it how they like – for example, on driving lessons, further education, University, holidays or back-packing.

Who is responsible for running the account ?

The child can take control of the account when they have reached the age of 16. But they cannot withdraw the money until they turn 18.

However, Parents / guardians with parental responsibility can open and control the money on the child’s behalf. So they can manage and control the funds and money within the child’s account. But, the money is held on behalf of the child it belongs to the child, named on the stated account.

How can someone open an account ?

As stated, a parent or parental guardian can open the account on the child’s behalf.

To open a Junior ISA you need to:

• choose the type of Junior ISA you want for your child – cash or stocks and shares (or both)
• choose your account provider
• get an application form from state provider.

Your child can only have:

• 1 cash Junior ISA
• 1 stocks and shares Junior ISA

A Child aged 16 and 17 can open their own Junior ISA, directly with a provider.

Where can I find a list of recommended providers to open my account with ?

They can be opened quite easily, directly or online in a matter of minutes. Through from a range of banks, building societies, credit unions, friendly societies and online platforms.

Once you have shopped around and found your preferred provider. You can contact them directly for more information about how you can open a Junior ISA with them. You may wish to keep admin and management simple and use existing providers that you already trust.

How do I then fund my ISA account ?

Anyone can pay money into a Junior ISA, on their behalf. But the total amount paid in cannot go over £9,000 in the 2024 to 2025 being current tax year.

It could be by adding cash, cheque, debit card or simple transfer from another savings account.

Simple example: If your child has £3,000 paid into their cash Junior ISA from 6 April 2024 to 5 April 2025, only £6,000 could be paid into their stocks and shares Junior ISA in the same tax year. Which across both schemes is a total of £ 9,000. Like other forms of ISA’s, if you don’t use your full allowance, during that tax year you lose it moving forwards.

What about transfers ?

You can transfer money between the following products:

• your child’s Junior ISAs, held elsewhere,
• or from a Child Trust Fund account (known as CTF) and a Junior ISA – but you will have to contact the Junior ISA provider directly to arrange this. A Child Trust fund may be applicable if a child was born between 2002 and 2011.

You cannot transfer money between a Junior ISA and an Adult ISA account, under current rules.

Can someone access the funds early ?

Yes, you can but under special circumstances only. So, the person or guardian can withdraw money out of a Junior ISA early if a child is terminally ill. Or worse case scenario, the child has died.

If your child dies !

If your child dies, any money in their Junior ISAs will be paid to the beneficiaries responsible for managing their estate.

Under normal circumstances this is usually one of the child’s parents. But it could be a spouse or partner if they were over 16 and married or in a civil partnership.

What do I need to do, if this tragic event happens ?

You do not need to contact HMRC but you’ll need to tell your account provider so they can close your child’s Junior ISAs.

Your account provider may need proof to do this, for example a copy of the death certificate.

‘Terminally ill’ means that the child has a disease or illness that is going to get worse and is not expected to live more than 6 months.

If you live in England or Wales, you have 6 months from the date of your child’s diagnosis to take money out of their account.

If you live in Northern Ireland, you have 12 months from the date of your child’s diagnosis to take money out of their account.

How do I claim under the terminally ill rules ?

Fill in the terminal illness early access form to let HM Revenue & Customs (HMRC) know that:

• your child is terminally ill
• you want to take money out of their Junior ISA

HMRC will let you know if you can take money out of your child’s Junior ISA

Again, if you live in Scotland, there’s no time limit for taking money out of their account.

Are the funds held within a Junior ISA protected ?

Yes, at present any cash deposit you put into authorised UK banks or building society. Is currently protected by the Financial Services Compensation Scheme (FSCS).

The FSCS savings protection limit is £85,000 per person (or £170,000 for joint accounts) per authorised firm.

It may be worthwhile checking which institution you use, as banking brands are part of the same authorised firm or parent company.

If you are lucky to be over that limit and have got more within the same bank or authorised firm. It may a good idea or consideration to move the excess to make sure your money is protected.

What about a stocks and shares ISA ?

Any Investment fund assets are usually held in safekeeping by a custodian on behalf of investors.

If an authorised investment firm does default, which means it’s unable to pay claims against it. The Financial Services Compensation Scheme (FSCS) will pay compensation of up to £85,000 per person, per institution.

With regard to a Junior Stocks and shares ISA it is a regulated investment product. Investment product providers must provide you with ‘key facts’ information that you can understand, covering:

• what the investment is and how it works
• the key risks including the risk of capital loss and counterparty risks
• charges (the fees that will be deducted from your returns or capital), and
• whether you’ll have the right to access the Financial Ombudsman service and the Financial Services Compensation Scheme.

What happens if things go wrong ?

If you’re unhappy with the service you receive or want to make a complaint, start off by contacting your provider or adviser. 

Most ISA providers are regulated by the https://register.fca.org.uk, which means that if you compliant is not resolved or dealt with in a satisfactory manner or outcome. You can take it further to the https://www.financial-ombudsman.org.uk

Remember !

If you found this blog post useful and informative, please feel free to check out my other posts on savings, on https://moneyminted.co.uk. Which cover savings, investing, pensions, recommended investing books so you can improve your investing and financial knowledge. So you too can reach your financial goals and aims in future.

It’s not a get rich quick journey, but you will get there in the end. If you create an action plan and think long term.