Most of us have heard of ISAs, but Junior ISAs aren’t as well known. In this blog we’ll help you get to grips with Junior ISAs, including how they work and how to open them. We’ll also explore how many you can have, as well as how much you can save. And finally, we’ll look at what happens to them when the account holder turns 18.
How do Junior ISAs work?
Junior ISAs are open to anyone living in the UK who’s under the age of 18.
If your child lives outside the UK, you can only open a Junior ISA for them if you’re a Crown servant and they depend on you for their care. Crown servants include people serving in the armed forces, overseas civil service or the diplomatic service.
Handily, Junior ISAs are very similar to ISAs. There are two types, both of which offer a long-term way to save:
- Cash Junior ISA
- Stocks and shares Junior ISA
You won’t have to pay tax on any interest you earn with a cash Junior ISA. Equally, you won’t have to pay tax on any capital growth or dividends you receive from a stocks and shares Junior ISA.
Be aware that you can’t take money out of a Junior ISA until your child turns 18 though. Therefore, if you think they’ll need access to funds before then, you may want to consider other options for their savings.
How to open a Junior ISA
You can open a Junior ISA if you’re the parent or guardian with parental responsibility for a child under 18. If your child is already 16 or 17 years old, they’re also able to open a Junior ISA themselves.
Likewise, you can manage the account until they turn 18, but they’re free to manage it themselves once they turn 16.
Regardless of who manages the account, the funds belong to your child. However, they can’t withdraw the money until they turn 18.
Once you confirm who’s opening the account, you’ll need to consider which type of Junior ISA you’d like. This could be a cash Junior ISA, a stocks and shares Junior ISA, or one of each type (more details on this below).
Having made your choice, you’ll want to explore the wide range of banks, building societies and investment firms that offer Junior ISAs . Once you’ve picked the right account for your child, you can make an application.
If your child already has a Child Trust Fund (CTF) they can’t have a Junior ISA as well. However, it is possible to transfer their CTF funds into a Junior ISA. CTFs were tax free savings accounts set up for children born between 1 September 2002 and 2 January 2011. So, if your child’s date of birth isn’t in that date range, this won’t be an issue.
How much can you put in a Junior ISA?
As with a standard ISA, you can invest a limited amount each tax year. However, the limit for Junior ISAs is lower than ISAs and is capped at £9,000 for the tax year 2025/26. This limit applies across all accounts. For example, if you invest £8,000 in a cash Junior ISA, you can only invest a further £1,000 in a stocks and shares Junior ISA in that tax year.
How many Junior ISAs can I have?
Your child can have up to two Junior ISAs. However, they can’t have two of the same kind of ISA. So, they could have one cash Junior ISA, and one stocks and shares Junior ISA, but they couldn’t have two cash ISAs.
If you have more than one Junior ISA, you can transfer funds between them though. For example, if you invest the maximum amount for a year equally between the two types, you could alter the balance later.
Of course, you can just pick which type you prefer and open a single account, which is easier to manage.
Can a grandparent open a Junior ISA?
Unfortunately, grandparents can’t open a Junior ISA for their grandchild unless they’re also their legal guardian with parental responsibility.
However, grandparents can contribute to a child’s Junior ISA, once it’s been opened by the child’s parent, their legal guardian with parental responsibility, or the child themselves if they are 16 or 17.
What happens to a Junior ISA at 18?
It probably won’t surprise you to know that once your child turns 18, they won’t qualify for a Junior ISA anymore. At this point their investment would transfer to a standard ISA.
Your Junior ISA provider will write to you with details of the relevant options. This could involve staying with them or transferring the account to another bank or building society.
It’s important to note that you can’t transfer funds from a Junior ISA to an ISA before this time though.
Alternatively, your child may decide to withdraw all or part of their funds from the ISA. For example, they may want to use them to help fund studying at university.
Whatever they do, it’s important to know that as soon as money is withdrawn from an ISA, it loses its tax-free status. So, don’t make any rash decisions.
As always, make sure you consider all the options before you commit to anything, as this will help you achieve the best outcome for your child.
