By starting to save early, you can put your children on the path to a solid financial future. Junior ISAs let you save and invest on behalf of a child under 18. And with no tax on the earnings, the money you put away can grow even faster.
Who can have a Junior ISA?
You can open a Junior ISA for your child if they:
- are under 18
- live in the UK.
If a child was born between 2002 and 2011, they might have a Child Trust Fund (CTF). These can be transferred into a Junior ISA.
If the CTF is ot transferred, when a child reaches 18, they’ll still be able to access the money. Or they can choose to transfer it into a normal cash ISA.
How does a Junior ISA work?
- A child’s parent or legal guardian must open the Junior ISA account on their behalf.
- Money in the account belongs to the child, but they can’t withdraw it until they turn 18, apart from in exceptional circumstances. They can start managing their account on their own from age 16.
- The Junior ISA limit is £9,000 for the tax year 2024/25 . If more than this is put into a Junior ISA, the excess is held in a savings account in trust for the child – it cannot be returned to the donor. Parents, friends and family can all save on behalf of the child as long as the total stays under the annual limit.
- No tax is payable on interest or investment gains.
- 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 or job training.
Types of Junior ISA
Junior Cash ISAs
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Junior Cash ISA is similar to a bank or building society savings account although the money is locked in and cannot be withdrawn until age 18.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 to either.
As a parent, there is a limit to how much of your money you can put into your child’s Junior ISA before you have to pay tax. To find out more, see MoneySavingExpert
With a Junior Stocks and Shares ISA account, you can put your child’s savings into investments like funds, shares and bonds.
Any profits you earn by trading investment funds, shares or bonds are free from tax.
Investments are riskier than cash but could give your child a bigger profit, and the value of a Junior Stocks and shares ISA can go down as well as up.
Which Junior ISA is right for your child?
Your child can have a Junior Cash ISA, a Junior Stocks and Shares ISA or both.
If they have both, the most they can save is still subject to a £9,000 limit for the 2024/25 tax year.
Since 6 April 2024, you have to be 18 to open an adult ISA. But if a 16 or 17-year-old opened an adult cash ISA before, they can continue contributing into it – up to the £20,000 limit for the 2024/25 tax year. This is on top of any money paid into their Junior ISA.
If you’re not sure whether a Junior Stocks and Shares ISA is right for your child, talking to an independent financial adviser can help you sort things out.
For more information, see our guide Choosing a financial adviser
Safe and secure?
How safe is a Junior Cash ISA?
Cash you put into authorised UK banks or building societies is protected by the Financial Services Compensation Scheme (FSCS).
The FSCS savings protection limit is £85,000 (or £170,000 for joint accounts) per authorised firm.
It is worth noting that some banking brands are part of the same authorised firm.
If you've got more than the limit within the same bank or authorised firm, it’s a good idea to move the excess to make sure your money is protected.
Find out at Which? banks that are part of authorised firmsOpens in a new window
For more information, see our guide How safe are my savings if my bank or building society goes bust?
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Investment fund assets are held in safekeeping by a custodian on behalf of investors.
If an authorised investment firm goes into 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.
Find out more in our guide Claiming compensation if you’ve been mis-sold
You can't claim compensation simply because the value of your investment falls below what you paid for it.
Information you should be given
A Junior Stocks and shares ISA is an 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.
Find out more in our guide Key information and cooling off periods
Transferring a Junior ISA
You can switch between the two types of Junior ISA or from one provider to another whenever you like.
But it’s important to do this carefully, so you don’t lose the tax-free status on the money.
A child can only have one Junior Cash ISA and one Junior Investment ISA at any one time.
Help with the cost of living
Worrying about money because of rising rents, high energy bills or debt? If so, we’re here to help.
Take the first steps to find your way forward with our guides to help you with the cost of living.
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 Financial Conduct AuthorityOpens in a new window. This means that if your complaint is not resolved to your satisfaction,Opens in a new window you can take it to the Financial Ombudsman Service.
