Cash Junior ISA
The Cash Junior ISA is the simplest way to save for your children’s future. They work in much the same way as a normal savings account, or ISA from any high street bank. You pay money in every month, or when you can afford it and when your child turns 18, that money is returned, with interest.
The money is locked away in the Junior ISA until the child’s 18th birthday, by which point it should have grown sufficiently to pay towards a car, university or even a house deposit.
All interest earned on the money in these accounts will be paid tax free, and this will not affect your other tax rights.
The biggest advantage of this type of Junior ISA is that it is impossible to lose money and whilst a high Bank of England base rate will leave you paying more for your mortgage, the chances are the rate of interest on your savings will increase as well.
The biggest disadvantage of this type of account is that it is unlikely to pay as much over an 18 year period as a stocks and shares Junior ISA, which involves a fund manager investing your money in the stock market.
To open an account for your child you need to be a UK resident eligible to pay tax.