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Individual Savings Accounts for children, known as Junior ISAs, are now available. They offer a new tax-free way of saving for your child’s future. Find out who can get one, how the accounts work and what to do to get started.
What is a Junior ISA?
Junior ISAs are long term, tax-free savings accounts for children up to the age of 18.
The money saved in Junior ISAs can’t be taken out until the child is 18.
Who can have a Junior ISA
Your child can have a Junior ISA if they:
- are under 18
- live in the UK
- are not entitled to a Child Trust Fund (CTF) account
Your child can’t have a Junior ISA if they already have a CTF account.
Children aged 16 could choose to open an adult cash ISA as well as a Junior ISA.
How the Junior ISA works
There are two types of Junior ISA:
- a cash Junior ISA
- a stocks and shares Junior ISA
Your child can have one or both types of Junior ISA at any one time.
There is no tax to pay on the income or any gains (profits) a Junior ISA makes.
Who the money in the Junior ISA belongs to
The money in the account belongs to your child and can’t be taken out until they are 18. But there are exceptions to this, for example if your child becomes terminally ill. See the sections ‘Your child is terminally ill' and 'Your child has died'.
Putting money into a Junior ISA
Anyone can put money into the account. The total amount that can be paid into a Junior ISA in each tax year is £3,600. (A tax year runs from 6 April one year to 5 April the following year.)
Your child can have both a cash and a stocks and shares Junior ISA. If they do, the total amount that can be paid into the two accounts in each tax year is £3,600. For example, £1,000 into a cash Junior ISA and £2,600 into a stocks and shares Junior ISA.
If your child has two Junior ISAs you can transfer money between them. But you can’t transfer money between a Junior ISA and an adult ISA or between a Junior ISA and a CTF account.
If your child moves abroad, you can still add money to their Junior ISA.
How to open a Junior ISA
If your child is under 16, someone with parental responsibility (for example a parent or step-parent) must open the Junior ISA for them.
Children aged 16 to 18 can open their own Junior ISA. But someone with parental responsibility could still open the account for them.
A range of banks, building societies, credit unions, friendly societies and stock brokers offer Junior ISAs. You can find out more information directly from them about their terms and conditions and how they operate their accounts. Try to look at a number of Junior ISAs from different providers before you decide what’s best for you and your child.
To open a Junior ISA you need to:
- choose the type of Junior ISA you want for your child, either a cash or stocks and shares account (or both), getting financial advice if necessary
- check which account providers offer the type of account you want
- choose the provider - they may be your own bank or building society or someone completely different
- get an application form from the provider - this could be done in person, over the phone or internet
Managing a Junior ISA
The Junior ISA will be in your child's name, but the person who opens the account is responsible for managing it. They are called the 'registered contact'.
The registered contact is the person who:
- should keep all the paperwork
- reports certain changes of circumstances - for example change of address
- is the only one who can change the account or provider
You can change to a different type of Junior ISA or to a different provider at any time. You can also change the registered contact to someone else with parental responsibility at any time.
What happens when your child is 16 or 18
When your child is 16 they can become the registered contact and manage their own account if they want to.
When your child is 18 they can choose to take the money out of the Junior ISA or invest it in a different type of account. Otherwise the Junior ISA will automatically become an adult ISA.
Your child is terminally ill
You can only take money out of a Junior ISA before your child is 18 if they are terminally ill. This means that they have a disease or illness that is going to get worse and are likely to die within six months.
Who can take the money out?
Only the registered contact can take the money out. If there isn’t a registered contact, then whoever has parental responsibility for the child will need to apply to the provider to manage the account.
How to take the money out
Contact the HM Revenue & Customs (HMRC) Helpline to let them know that:
- your child is terminally ill
- you want to take money out of the Junior ISA
You will need to provide evidence that your child is terminally ill.
If your child gets Disability Living Allowance (DLA) because of their illness, tell the HMRC Helpline when you contact them.
If your child doesn’t get DLA, HMRC will send you a form for your doctor to complete and return to the Child Trust Fund Office. This office deals with all terminal illness cases for both Junior ISAs and Child Trust Fund accounts.
What happens next
HMRC will let you and the provider know if you can take the money out of the account.
Your child has died
The money in the account will be paid to the person who 'inherits' the child's estate (their property and possessions). This is often one of the child’s parents, but if your child was married, it could be their husband or wife.
What you need to do
This will be a very difficult time for you. If your child has died you don’t need to contact HMRC, but you will need to tell the provider so the account can be closed. The account provider will usually need proof, for example they may ask for the death certificate.
How to find out more about Junior ISAs
For more information about Junior ISAs, you can contact HMRC's ISA Helpline.
Provided by HM Revenue and Customs