Why Open a Junior ISA?
It’s never too early to start saving for your little one’s future. University, a new car, their first home – no matter what the future holds for your child, one of the most important ways you can help is by providing them with a strong financial foundation to build upon.
But it’s easy to get lost amongst the countless savings options out there, so how do you choose the right one to make sure you and your children are getting the best from their savings?
A Junior ISA may be the perfect option to help make your child’s future dreams come true.
What is a Junior ISA?
While a parent or guardian is required to open the account, the funds within belong to the child.
A Junior ISA (or sometimes referred to as JISA) is a specially designed, tax-free savings account for children aged between 0-18 years old, who are living in the UK. Once opened by a parent or guardian, other family members and friends can all pay money into the account, to make the most of the child’s annual Junior ISA allowance which is £9,000 in the 2021/2022 tax year. It is also possible for children aged 16 and 17 to open a JISA themselves.
There are two types of Junior ISA that you can choose from:
- A cash Junior ISA
- A stocks and shares Junior ISA
Are Junior ISAs a good idea?
It’s amazing just how quickly our children grow from tiny toddlers to independent teens.
What doesn’t change is how much our children rely on us to provide them with a stable foundation as they grow.
Junior ISAs allow you to provide your child with an extra helping hand when it comes to their future.
Providing them with the financial capabilities to help them reach their goals, through long-term tax-free saving.
Junior ISAs are a simple and efficient way to make your money go further and can also be the perfect alternative for Christmas or birthday presents, giving family and friends the option to pay into your child’s account too.
Who can open a Junior ISA?
For any child up to 18 years of age, a parent or guardian with parental responsibility can open a Junior ISA on behalf of their child.
Children between the ages of 16 and 17 can open an account themselves, as well as take control of an account that has previously been opened on their behalf. However, any funds within the account cannot be withdrawn until the child turns 18.
How much can I pay into a Junior ISA?
Your child’s Junior ISA allowance allows you to save up to £9,000 in the 2021/2022 tax year.
When you open a Junior ISA with us you can choose to make regular payments into the account from just £50 per month, lump sum payments of at least £500, or top ups of £50. It’s easy to apply online and you can also transfer funds from other Junior ISAs or Child Trust Funds.
How many Junior ISAs can my child hold?
Unlike ‘adult’ ISA’s where it’s possible to have multiple ISA accounts from different tax years, children can only hold one cash Junior ISA and/or one stocks and shares Junior ISA at any one time. So if your child already has a cash Junior ISA with £7,000 saved into it and you want to open a cash Junior ISA with another provider, you will need to transfer the £7,000 into the new Junior ISA.
If your child hold both types of Junior ISA, the combined total which can be saved in the tax year must still be within the annual JISA allowance.
What other features and benefits does a Junior ISA have?
Features and benefits offered depend on the Junior ISA provider you choose. For example Post Office Insurance Society Junior ISAs are provided by our parent company Foresters Friendly Society and are classed as a Stocks and Shares ISA, meaning that your child ‘s savings maybenefit from potential growth with the addition of annual and/or final bonuses.
By opening a savings plan with us your child automatically becomes a member with access to our member benefits packagewhich includesing discretionary grants to help cover the cost of things like dental and optical care, or higher education costs.
What happens to the Junior ISA when my child turns 18?
When your child turns 18, the account automatically becomes an adult ISA, and your child will have full ownership of the account, allowing them to manage their funds however they choose.
Is a Junior ISA the only option to save for my child?
While JISAs are one of the best options for long-termsaving for your child, there are other options you could consider such as a Children’s Tax Exempt Plan.
A Children’s Tax Exempt Plan is an affordable plan which can be held alongside your child’s Junior ISA or Child Trust Fund, allowing you to contribute £25 a month from anywhere between 10 to 25 years.
The plan is available for all children aged between 0-15 years old and provides them with a tax free cash lump sum when they need it the most. Your child must be over the age of 16 to receive their cash, but a Children’s Tax Exempt Plan can help you give your child an additional safety net, or a cash boost towards things like university fees, a new car, or even a deposit for a new home.
How to open a Junior ISA
With POIS, opening a Junior ISA has never been easier and can be done by post or online.
We know that raising a child is far from simple, so we’ve made the process of saving for your child’s future as stress-free as possible.
As the parent or guardian, you can open a JISA for you child from as little as £50 a month.
Take the first step in building a secure financial future for your little one today.
You should be aware that in some investment conditions your child may not get back the full amount originally invested. Also, bear in mind that tax rules may change and depend on individual circumstances. Member benefits are not regulated by the Financial Conduct Authority or the Prudential Regulation Authority. The addition of bonuses is not guaranteed.
The content of this article is for information purposes only and does not constitute financial advice. We do not offer financial advice. If you’re unsure as to the suitability of a product you should seek advice from a Financial Adviser. You may have to pay for this advice.