What is a Junior ISA?

A Junior ISA is a children’s savings account, allowing children and their parents to save tax-free for their future.

The Junior ISA will be released in November as a direct replacement for the Child Trust Fund and works in a similar way to an adult ISA, but maintains many of the rules of the Child Trust Fund.

The Junior ISA will have an annual allowance of £3,000, but won’t have any government contributions like the Child Trust Fund’s voucher scheme.

Like the Child Trust Funds, the Junior ISA will keep money locked in until the child’s 18th birthday, releasing it as a large lump sum. This large lump sum, which could be as much as £100,000 if invested fully and successfully throughout their lives, will default into an adult ISA once the child reaches young adulthood.

Like the Child Trust Fund, anyone will be able to pay into the Junior ISA tax-free, allowing parents, grandparents and friends to invest in the child’s future as and when they want.

Like adult ISAs and Child Trust Funds, the Junior ISA will be availablein cash and stocks and shares variations, allowing parents to decide whether they would prefer a safe but potentially low-paying investment in a cash market, or a riskier but potentially better-paying stock market investment.

Any child who already has a Child Trust Fund will have to stick with their existing account, but any other child under 18, including those born outside of the Child Trust Fund’s eligibility period (which ran from September 2002 – January 2011) will be able to open a Junior ISA.

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