{"id":11016,"date":"2015-04-14T16:48:46","date_gmt":"2015-04-14T15:48:46","guid":{"rendered":"http:\/\/www.kidstart.co.uk\/blog\/?p=11016"},"modified":"2016-11-09T16:57:26","modified_gmt":"2016-11-09T16:57:26","slug":"junior-isas-explained","status":"publish","type":"post","link":"https:\/\/www.kidstart.co.uk\/blog\/junior-isas-explained\/","title":{"rendered":"Junior ISAs explained"},"content":{"rendered":"<h2>Not sure how Junior ISAs work, or whether they\u2019re right for you?<\/h2>\r\n<strong>Don\u2019t worry \u2013 here we cover exactly what you need to know about Junior ISAs.<\/strong>\r\n<h3><span style=\"text-decoration: underline;\">What are Junior ISAs?<\/span><\/h3>\r\nJunior ISAs are tax-free savings accounts for kids aged under 18. They allow you to save or invest up to \u00a34,000 per tax year (\u00a34,080 from April 2015). The idea is that you build up a tax-free nest egg for your child over time.\r\n\r\nThink of a Junior ISA as being like a bag. Any money you put in the Junior ISA \u2018bag\u2019 (up to \u00a34,000 a year) is protected from tax. This means that any interest the money earns is not subject to tax.\r\n<h3><span style=\"text-decoration: underline;\">Who can get a Junior ISA?<\/span><\/h3>\r\nAny child aged under 18 can get a Junior ISA, as long as they:\r\n<ul>\r\n \t<li>&#8211; Were born on or after 3<sup>rd<\/sup> January 2011<\/li>\r\n \t<li>&#8211; Were born before September 2002<\/li>\r\n<\/ul>\r\nChildren who were born between 1<sup>st<\/sup> September 2002 and 3<sup>rd<\/sup> January 2011 can\u2019t get Junior ISAs \u2013 <a href=\"http:\/\/www.kidstart.co.uk\/blog\/junior-isas-child-trust-funds-savings-accounts-childrens-savings-explained\/\" target=\"_blank\">they get Child Trust Funds (CTFs) instead.\u00a0<\/a>\r\n\r\n&nbsp;\r\n<h3><span style=\"text-decoration: underline;\"><strong>How do Junior ISAs work?\u00a0<\/strong><\/span><\/h3>\r\n<ul>\r\n \t<li>As a parent or legal guardian, you open a Junior ISA on your child\u2019s behalf<\/li>\r\n \t<li>You (or other members of your family) can contribute up to a maximum of \u00a34,000 per tax year (\u00a34,080 from April 2015)<\/li>\r\n \t<li>If you don\u2019t use your ISA allowance of \u00a34,000 each tax year (April 6-April 5) you lose it. You can\u2019t \u2018roll over\u2019 your allowance into the next year<\/li>\r\n \t<li>You can pay as much or as little money in as you like, as often as you like (provided it doesn\u2019t go over the \u00a34,000 annual limit)<\/li>\r\n \t<li>With Junior ISAs, no tax is payable on interest or investment gains earned<\/li>\r\n \t<li>When your child reaches 18, the Junior ISA automatically becomes a normal adult ISA. This means they can continue to add to their tax-free nest egg into adulthood<\/li>\r\n \t<li>Bear in mind that when your child reaches 18, full control of the ISA account is passed to them (not their parents or guardians).<\/li>\r\n<\/ul>\r\n&nbsp;\r\n<h3><span style=\"text-decoration: underline;\">The two types of Junior ISA<\/span><\/h3>\r\nThere are two main types of Junior ISAs: Junior cash ISAs and Junior stocks and shares (investment) ISAs.\r\n<h4><span style=\"text-decoration: underline;\">Junior cash ISAs<\/span><\/h4>\r\nJunior cash ISAs work just like a normal savings account, except that the interest is tax-free and your child cannot access the money until they are 18.\r\n<h4><span style=\"text-decoration: underline;\">Junior stocks and shares (investment) ISAs<\/span><\/h4>\r\nWith a Junior Stocks and shares ISA you can put your child\u2019s savings into investments like shares and bonds. Any profits that are earned are then free from tax. Investment ISAs are riskier than cash ISAs (obviously investments can go down as well as up) but if your stocks and shares do well, the rewards are likely to be far bigger.\r\n<h3><span style=\"text-decoration: underline;\">Which Junior ISA is right for me?<\/span><\/h3>\r\nUltimately, only you can answer that question! It depends on:\r\n<ol>\r\n \t<li>1. What your attitude to risk is<\/li>\r\n \t<li>2. How old your child is<\/li>\r\n<\/ol>\r\nIf you don\u2019t like risk, or can\u2019t afford to lose any of the money you save, then a Junior cash ISA is probably for you.\r\n\r\nStocks and shares ISAs can net your child far more money than cash ISAs; but they can also lose you big money, too.\r\n\r\nOver the long term (we\u2019re talking <em>at least<\/em> 10 years here) the stock market tends to outperform cash. So if you can afford to leave the money untouched for however long it takes to ride out any stock market wobbles (and your child is still young) then you may want to consider putting some money into a Junior stocks and shares ISA.\r\n\r\n&nbsp;\r\n<h3><span style=\"text-decoration: underline;\">Mix and match Junior ISAs<\/span><\/h3>\r\nIf you wish, you can open both a Junior cash ISA and a Junior stocks and shares ISA.\r\n\r\nNote that you can only open a maximum of one Junior cash ISA and one Junior stocks and shares ISA per child.\r\n\r\nAlso remember that the \u00a34,000 maximum limit applies whether you have one Junior ISA or two.\r\n\r\nFor example:\r\n<ul>\r\n \t<li>You <strong>could<\/strong> put \u00a33,000 in a cash ISA, and \u00a31,000 in a stocks and shares ISA (as \u00a33,000 + \u00a31,000 = \u00a34,000 annual limit)<\/li>\r\n \t<li>You <strong>couldn\u2019t<\/strong> put \u00a34,000 in a cash ISA and \u00a34,000 in a stocks and shares ISA (as \u00a34,000 + \u00a34,000 = \u00a38,000, which twice as much as the \u00a34,000 annual limit).<\/li>\r\n<\/ul>\r\n&nbsp;\r\n<h3><span style=\"text-decoration: underline;\">Transferring a Junior ISA<\/span><\/h3>\r\nYou can switch between the two types of Junior ISA (or from one bank\u2019s ISA to another) whenever you like.\r\n\r\nHowever ALWAYS use an ISA transfer form to move your money (just ask your bank or building society for one). If you don\u2019t, your old ISA won\u2019t be closed properly, and you\u2019ll risk losing the tax-free status of your money.\r\n\r\nAt the moment you can\u2019t transfer a Child Trust Fund account into a Junior ISA, though the government has said that this will change from April 2015.\r\n\r\n&nbsp;\r\n<h3><span style=\"text-decoration: underline;\">Are Junior ISAs worth it?\u00a0<\/span><\/h3>\r\nJunior ISAs are a good savings option for your kids, but the best option for you depends on your circumstances.\r\n\r\nOn the plus side: if you don\u2019t mind locking the money away until your child is 18, and want the tax benefits of an ISA, they can be a good option.\r\n\r\nOn the minus side: there\u2019s nothing to stop you finding a normal savings account that might pay out a higher rate of interest, and putting your child\u2019s savings in that.\r\n\r\n(Just make sure you fill out an R85 form when you open a children\u2019s bank account to ensure you don\u2019t pay tax on your child\u2019s savings. You can get an R85 form from your bank, building society or from the HMRC website).\r\n\r\nKids only pay tax if:\r\n<ul>\r\n \t<li>&#8211; They earn more than \u00a310,000 a year<\/li>\r\n \t<li>&#8211; They receive a wodge of cash from either parent that will earn over \u00a3100 in interest<\/li>\r\n<\/ul>\r\nBut while your kids\u2019 savings are probably tax-free <em>now<\/em> (whether they\u2019re in a Junior ISA or not), they won\u2019t be when your kids eventually start earning a salary. That\u2019s when it is useful to have a tax-free ISA nest-egg that they can add to as they grow into adulthood.\r\n\r\nKidStart offers money back for your children when you open an account with a number of different providers. See all of them <a href=\"https:\/\/www.kidstart.co.uk\/hubs\/Savings-Investments.aspx\" target=\"_blank\"><span style=\"text-decoration: underline;\">here<\/span><\/a>.\r\n<h3>Related Article<\/h3>\r\nhttps:\/\/www.kidstart.co.uk\/blog\/quick-guide-child-savings\/\r\n\r\n<hr \/>\r\n\r\n<h4><strong><a href=\"https:\/\/www.kidstart.co.uk\/\" target=\"_blank\">KidStart<\/a><\/strong> a little help along the way<\/h4>","protected":false},"excerpt":{"rendered":"Not sure how Junior ISAs work, or whether they\u2019re right for you? Don\u2019t worry \u2013 here we cover exactly what you need to know about Junior ISAs. What are Junior ISAs? Junior ISAs are tax-free savings accounts for kids aged under 18. They allow you to save or invest up to \u00a34,000 per tax year","protected":false},"author":1,"featured_media":11017,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[3507,3349],"tags":[],"class_list":["post-11016","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-save-for-your-child-with-help","category-household-savings-advice"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.9 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\r\n<title>Junior ISAs explained - KidStart Magazine<\/title>\r\n<meta name=\"description\" content=\"Find here what ISas are, how they work and if they\u2019re right for you.\" \/>\r\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\r\n<link rel=\"canonical\" href=\"https:\/\/www.kidstart.co.uk\/blog\/junior-isas-explained\/\" \/>\r\n<meta property=\"og:locale\" content=\"en_GB\" \/>\r\n<meta property=\"og:type\" content=\"article\" \/>\r\n<meta property=\"og:title\" content=\"Junior ISAs explained - 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