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If you can afford to, saving for your child can give them a great headstart towards a solid financial future. The government incentivises this by making the earnings from Junior ISAs tax free.
So, let’s walk through everything you need to know about Junior ISAs.
A Junior ISA is a savings account designed for children, and can be opened on their behalf any time from birth up to the age of 18. It offers a way for you to build a tax-free nest egg for your child, which they can benefit from once they reach 18 years of age.
You can open a Junior ISA for your child if they are under the age of 18 and if they live in the UK.
And, if your child was born between 2002 and 2011, check if they were given a Child Trust Fund (CTF) by the government. If so, you will need to transfer the CTF into the Junior ISA as you can’t have both at the same time.
The child’s parent or legal guardian opens the Junior ISA on their behalf. The money held in the Junior ISA belongs to the child, and withdrawals can only be made in exceptional circumstances before the child is 18. The child can manage their own Junior ISA from when they turn 16 and, when they become 18, they can withdraw the funds.
If it is likely to be helpful for the young person to access their savings earlier than when they turn 18, a savings account could be a more suitable option and may also have better interest rates.
For the tax year 2025/26, the annual limit you can invest in a Junior ISA is £9,000. Any excess amount deposited in a Junior ISA cannot be returned to the donor. Instead, it is kept in trust in a savings account for the child.
Anyone can deposit funds into a Junior ISA, as long as the total stays under the annual limit.
When the child turns 18, the Junior ISA is automatically rolled over into an adult ISA. At this time, the now young adult can choose to withdraw their money and spend it however they wish.
The Junior ISA (JISA) annual allowance is significantly lower than an adult ISA. For example, in the current 2025/26 tax year, the JISA annual allowance is £9,000 compared to the adult ISA £20,000 annual allowance.
Unlike with the adult ISA, any unused JISA annual allowance cannot be transferred to the following tax year.
There are two other key differences between the JISA and an adult ISA:
Only a parent or legal guardian can open a Junior ISA, and they have to have parental responsibility for the child they are opening the Junior ISA for.
No, only a parent or legal guardian can open a Junior ISA. However, grandparents and any other family or friends can make deposits into the Junior ISA.
Contributing to the Junior ISA does not give the donors any ownership rights over the JISA and they will not receive any statements, confirmation of payments, contract notes or other documentation. All account updates are directed to the account’s legal owner – the person who opened the account. The owner of the JISA becomes the child named in the JISA, when they turn 16.
Your child can have one Junior Cash ISA and one Junior Stocks and Shares ISA. If they have both, the combined amount can only be the current tax year’s limit.
There are two kinds of Junior ISA.
This works in a similar way to a standard savings account with a bank or building society, apart from the fact that the money can’t be touched until the child is 18 and they – or you – don’t pay tax on any interest earned on their savings.
You will usually get to choose between a fixed rate or variable rate of interest, though variable rate products are more common.
A variable rate Junior Cash ISA’s rate of interest generally changes in line with the Bank of England’s base rate and can therefore go up and down.
If you take out a fixed rate Junior Cash ISA, the fixed rate period will generally be relatively short term, i.e. a period of one to two years.
Although the value of a Junior Cash ISA will never drop below the amount that has been deposited into it, in real terms there is likely to be a loss in value due to inflation.
With this product, the money deposited for your child is invested in funds, shares and bonds. Any profits made from these investments are tax free.
You can invest via a managed fund, which is a good option if you don’t have much experience in investing or if you just prefer to have the fund managed on your behalf.
If you prefer, you can choose the investments yourself by opting for a self-select fund.
Both types of Junior Stocks and Shares ISA come with arrangement fees and ongoing management fees.
With a Junior Stocks and Shares ISA, the capital is not guaranteed – as the money is invested, there is a chance of higher returns than with a Junior Cash ISA, but this also comes with higher risk and you may not get back what you put in.
The main protection is from the Financial Services Compensation Scheme (FSCS). Set up to cover people’s savings in the event of a bank going bust, the FSCS protects 100% of the first £120,000 of your savings and applies to the total amount you have saved with each UK-regulated financial institution – not each account within that institution.
If you have put cash into an investment fund, you’ll get 100% of the first £85,000 back if the bank goes out of business.
So, if you open a Junior ISA with a financial institution that is a member of the Financial Services Compensation Scheme, a maximum of £85,000 will be protected with each Junior Stocks and Shares ISA provider. Junior Cash ISAs will be protected up to £120,000.
The money held in a Junior ISA legally belongs to the child, not the parent. This means that the parent or legal guardian manages the account but they cannot withdraw any money.
This stipulation protects the money for the child’s benefit alone.
Our expert team of independent financial advisers keep up to date with all the products available across the marketplace, to help you to choose the right Junior ISA to best suit your circumstances.
You can email us, fill out the contact form on our website or call us on 02380 668407. We look forward to hearing from you.
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