It’s never too early to start thinking about saving for the future. A Junior Individual Savings Account or ‘JISA’ gives children the opportunity to start saving early – via cash, stocks and shares, or a combination of the two – within a tax-free wrapper. According to HMRC, £582m was subscribed to JISAs in 2014/15.
The maximum amount that may be paid into a JISA in the 2016/17 tax year is £4,080 and this can be invested into a cash JISA or a stocks and shares JISA, or allocated between the two. A child can hold either type of JISA or can mix and match between the two. JISAs may be switched from cash to stocks and shares, and back again, so they offer considerable flexibility.
However, a fresh JISA cannot be opened with a different provider in each tax year – the child can have only one cash JISA and one stocks and shares JISA during their childhood, although the cash and stocks and shares components can be held with different ISA providers. A JISA automatically turns into a full adult ISA when the child reaches 18.
Although a JISA can only be opened for a child under the age of 16 by a parent or a guardian with parental responsibility, anyone can pay money into the JISA for the child’s benefit. However, the parent or guardian who opens the JISA will be the registered contact and will be responsible for managing the JISA account and making decisions about any changes to the underlying investments or providers.
The money held within a JISA belongs to the child and the child can take control of the JISA from the age of 16; however, the money cannot be withdrawn from the JISA until they reach the age of 18, (with a few very limited exceptions). Children aged 16 or 17 are allowed to open their own JISA and are also able to open an adult Cash ISA if they wish.
In order to be eligible for a JISA, a child has to be living in the UK and aged under 18. Until relatively recently, children who were born between 1 September 2002 and 2 January 2011 were only eligible for a Child Trust Fund (CTF). However, following changes that were introduced in April 2015, those CTF savings can be transferred to a JISA instead.