Junior ISA

What are Junior ISAs?

6 million children are eligible for the new Junior ISA

How Junior ISAs work

Junior ISA are tax-free savings accounts for children under the age of 18 which replaced child trust funds. Junior ISA providers may have different criteria for opening their ISAs. For instance, some building societies allow parents to open them up to when the child is 18, but some other providers will let children aged 16 or 17 open their own, so it's worth checking this with the Junior ISA provider first.

The Treasury has estimated that six million children are now eligible for Junior ISA, with 800,000 more eligible each subsequent year.

The new accounts act similarly to cash ISAs. They are saving and investment 'wrappers' which shield any growth in your children's cash from both income and capital gains tax. You won't be able to get one for your child if they already have a CTF.

The new products went on sale on 1 November 2011, but all government contributions to child trust funds have been stopped since 1 January 2011. Babies born on or after that date are ineligible to open child trust funds, but will be able to open a Junior ISA.

It is also important to note that children born before September 2002 who were excluded from Child Trust Funds are eligible for Junior ISA.

How much can I put in?

The Junior ISA contribution limit is £4,080. Anybody this limit will apply until 5 April 2015 and will then be updated annually in line with the Consumer Price Index (CPI). Anybody (e.g. a family member) or organisation will be able to contribute to a child's Junior ISA account.

From 1 July 2014, the overall investment limit for a Junior ISA in 2014/15 will be increased to £4,000 a year.

The contribution limit applies across all cash and stocks and shares Junior ISA, with no statutory rules on how funds should be allocated across the two. There will be no government contributions to Junior ISA.

When will my child get access to the money?

Any money placed into a Junior ISA will not be able to be accessed until the child turns 18 years old. At this point, the Junior ISA will become a full ISA and the adult limits, currently £15,240 for a cash ISA and stocks and shares ISA, will apply.



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