Junior ISA
The Junior ISA
On 1st November 2011 we launched the eagerly awaited Junior ISA, a new savings account which allows you to save and invest on behalf of a child. It is anticipated that Junior ISAs will quickly become a popular way for family and friends to build up tax-efficient savings and investments to help give children the best possible start in life.
The facts
• Annual contribution allowance of £3,600 per child, per tax year. This will rise in line with inflation from 2013.
• Account is opened and managed by parent or guardian but held in the child's name.
• Anyone can contribute to a child's Junior ISA.
• Same tax benefits as an adult ISA – no capital gains tax and no further tax on any income.
• The money is ring-fenced for the child until they are 18, no withdrawals are permitted before then except in the event of terminal illness or death.
• When the child reaches 18, the account automatically converts into an 'adult' ISA and they can fully access their investments and savings. Parents have the option to allow their child to manage the Junior ISA from the age of 16 however the child cannot withdraw any capital until aged 18.
Who is eligible for a Junior ISA
• Any child resident in the UK who was not eligible for a Child Trust Fund (CTF)
.• Children born on or after 3 January 2011
• Children (aged under 18) born before 1 September 2002
• Children born between 1 September 2002 and 3 January 2011 who didn't qualify for a Child Trust Fund.
Can I transfer my child's Child Trust Fund in to a Junior ISA?
It will not be possible to transfer Child Trust Funds into Junior ISAs, or vice versa. The two types of accounts will remain separate.
Current Child Trust Funds will remain open until your child reaches 18 and you can continue to make payments; but the government will no longer contribute towards it. Investments into Child Trust Funds were previously limited to £1,200, however this was increased to £3,600 on 1 November 2011 and will continue to be aligned with the Junior ISA going forward.