Junior ISA FAQ’s
The Junior ISA is a brand new product, and as such you may have a lot of questions about it.
We’ve done our best to answer the most commonly asked ones here, but if you have any other questions visit our Ask the Expert section and our resident IFA will be pleased to help.
What is a Junior ISA account?
A Junior ISA account is the government’s replacement for the Child Trust Fund. (CTF) It will provide children up to the age of 16 with a tax free savings plan, which anyone can invest into on their behalf. The money cannot be touched until the child’s 18th birthday, which makes the Junior ISA ideal for long term saving for your child’s future and expensive future costs like house deposits and university.
How much money can I pay into my Junior ISA?
The government has yet to announce the annual limit for the Junior ISA, but it is believed that it will be at least as much as the Child Trust Fund, which allowed you to pay £1,200 a year in tax free. As soon as we have more information we will update it here.
How many Junior ISA accounts can my child have?
As with Adult ISAs, you can only have one Junior ISA at any one time.
My Child was born before the CTF Fund was introduced and has not been able to benefit from a Tax Free Savings account like this. Will they be eligible?
Yes, The Junior ISA is going to be open to all children, up to the age of 16, so those children born before September 2002 when the CTF was introduced will be able to save in one of these accounts.
Will I be able to open a Junior ISA, in addition to my child’s existing Child Trust Fund?
Whilst this has not yet been confirmed the answer is unlikely. Because of the tax free savings it is unlikely that the government would allow you to save into both a Junior ISA and a CTF. CTFs will continue for anyone who already has one, until the child’s 18th birthday so you are unlikely to lose out. If the tax free limit for the Junior ISA is higher than the Child Trust Fund, it’s expected that the government would make allowances for this.
Should I choose a cash Junior ISA account, or a stock and shares account?
The million dollar question and the answer isn’t simple.
A cash Junior ISA allows you to save money into an account, and you will receive interest based on the Bank of England’s current base rate. At the moment this is very low, so interest rates will also be low. Over an 18 year period this will most likely fluctuate so you will have some good years and bad ones. Your fund will never lose value.
A stocks and shares Junior ISA works differently as your money is invested in the stock market and the performance of your money is reliant on the performance of these shares. Whilst your fund could lose value if the shares lost value, you can stand to gain a substantial amount more if the shares perform well.
Once the products are launched we will have a comprehensive comparison table allowing you to make an informed decision for yourself.
Can I pay into the Junior ISA if I move abroad?
The Junior ISA is a product for the UK market. If you were already saving into an account in the UK and then moved away, your money would stay in the same place, but you wouldn’t be allowed to pay any more money into the account, until you move back to the UK.