Junior ISAs Explained
What is a Junior ISA?
Junior ISA (JISA) is a new tax efficient account designed for adults to save on behalf of children.
Once parents open a Junior ISA for their child, subscriptions may then be made to the account by anyone, providing the total of subscriptions does not exceed the annual limit.
What investment options does a Junior ISA offer?
Like adult ISAs, there are two types of Junior ISA:
- a stocks and shares Junior ISA, and
- a cash Junior ISA
You can open a cash Junior ISA and a stocks and shares Junior ISA provided you do not subscribe more than the annual subscription limit.
Children will only be able to hold one cash Junior ISA and one stocks and shares Junior ISA at any time.
At Progressive we only offer the cash Junior ISA.
How do I open a Junior ISA?
Any child under the age of 18 who is resident within the UK and who wasn’t eligible for a Child Trust Fund can hold a Junior ISA:-
- children born on or after 3 January 2011
- children born on or before 31 August 2002.
- children born on or between 1 September 2002 and 2 January 2011 and who didn’t qualify for a Child Trust Fund.
A parent or someone with parental responsibility, can open a Junior ISA on behalf of an eligible child. The person who opens the account is known as the Registered Contact. Children over the age of 16 who are eligible may open a Junior ISA themselves.
You can open a cash Junior ISA for as little a £1 and you will be given a passbook to help you keep a record of your transactions. Any family member or friend can add to this at any time up to the yearly subscription limit. Any subscriptions made to a Junior ISA are a gift to the child, and as such cannot be repaid to the subscriber if at a later date the subscriber changes their mind.
Withdrawals
No withdrawals are allowed from the account before the child reaches 18 years old, unless there are extreme circumstances such as death or a terminal illness.
What will happen to the Junior ISA when my child reaches 16 & 18 years of age?
When your child reaches 16, if they wish, they may assume responsibility to manage the account themselves without the consent of the existing Registered Contact.
On your child’s 18th birthday their Junior ISA is automatically converted into an adult ISA and they will have full access to their savings.
Junior ISA Subscription Limits
You can contribute up to £3,600 in the current tax year. Like an adult ISA, this limit will increase with inflation from the 6th April 2013. The £3,600 can be invested into the cash and stocks and shares elements in any proportion provided the overall contribution does not exceed the £3,600 limit.