A Junior ISA is a tax efficient savings vehicle that allows you to save up to £4,128 for the 2017/18 tax year. The account is for the benefit of a child and is held in the name of the child, with all cash and investments belonging to them, however all investment decisions or instructions are given by a “registered contact” – typically the parent or adult who has parental responsibilities.
In normal circumstances this money cannot be withdrawn until the child is 18 (withdrawals are permitted in the event of ill health (terminal illness) or death). There is no capital gains tax liability within a Junior ISA and there is no further tax to pay on dividends. There is also no need to declare any gains or income received in the Junior ISA to HMRC.
If you’re happy for your child to be able to access their investments from age 18, making all their own decisions from then about how and when to take money out of their Account, then our Junior ISA may be for you.
Junior ISA’s can be a great way to give your child a head start as they become a young adult. Their ISA could help buy a car, pay university tuition fees, put down a deposit on property. Or with anything else they need.
Please read our ISA Key Facts before deciding whether a Junior ISA is right for you and your child.
Consider our First Steps Investment Dealing Account to invest more for your child in the markets in a timely and cost efficient way
Most children born between 1 September 2002 and 3 January 2011 qualified for a CTF. The government put some money in and anyone could top this up on the child’s behalf.
Junior ISAs replaced CTFs from January 2011 and a child can only have one or the other. The good news is you can now transfer a CTF to a Junior ISA.
Why does this matter? No new CTFs can be opened so the firms that provide them may not have the incentive they once did to keep them competitive.
A few things to think about if your child has a CTF:
If you’re the registered contact for the CTF, just ask us and we’ll arrange it. The transfer value of the CTF won’t count towards your £4,128 investment limit either.
Your CTF provider might charge you for leaving. We won’t charge you for transferring to us.
transfer in form
A Junior ISA can be opened for any child under the age of 18 although if a child already has a Child Trust Fund it would have to be transferred to the Junior ISA once this has been opened.
£50 (either as a one off or regular payment).
£4,128 in the 2017/18 tax year and due to rise in line with the Consumer Prices Index each year in future.
A UK resident parent or guardian aged 16 or over must open a Junior ISA, but after that anyone can pay in.
The child. They can control the investments from age 16 but can’t access them until they reach the age of 18. At that point the Junior ISA becomes an adult ISA in their name. The only way to get money out of a Junior ISA before 18 is if the child is terminally ill or dies.
There is no tax to pay on income or investment growth inside a Junior ISA. (Apart from a tax of 10% on any dividend payments on UK shares. This is taken off before the dividend is paid and can’t be reclaimed.)
£3.33 a month to hold a Junior ISA Account with us. You will also pay charges on the investments you hold and for any transactions you ask us to carry out. The charge changes to £10.00 a month when the child reaches 18 and it converts to a regular ISA Account. Read our Charges Guide for the details.
From the age of 16 a child could open their own Junior ISA, provided they were resident in the UK. A child can only have one Junior ISA, but this can be transferred between different providers if you like.
Alliance Trust Savings Limited is a subsidiary of Alliance Trust PLC and is registered in Scotland No. SC 98767, registered office, PO Box 164, 8 West Marketgait, Dundee DD1 9YP; is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, firm reference number 116115. Alliance Trust Savings gives no financial or investment advice.