Junior ISAs

There are two types of Junior ISA:-

  • A cash Junior ISA or
  • A stocks and shares Junior ISA

In both cases the current limit is £4,080 per annum and you won’t pay tax on the income or the capital growth you receive.

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 accounts, but the money belongs to the child.

Anyone within and outwith the family can make contributions to a Junior ISA; such contributions are Inheritance Tax (IHT) free if they are within the annual allowance (£3,000 per annum) or if they are exempt as ‘gifts out of normal expenditure’.

The child can take control of the account when they are 16, but can’t withdraw the money until they are 18. (Comments – (1) As usual, these tax saving schemes benefit the better off. (2) There is a potential downside if the child turns into a financially irresponsible individual).

For information on Lifetime ISAs, click here.