What is a Junior ISA?
A Junior Individual Savings Account (Junior ISA) is a savings account which is free of tax for under 18s. The limit for a Junior ISA is £4,080, this is the most an individual can save in their Junior ISA in any tax year. A tax year starts on the 6th April and ends on the 5th April.
What are the conditions for a Junior ISA?
To have a Junior ISA you must:
- Be under 18
- Live in the UK
These conditions must also apply:
- Depend on a guardian for care
- Be a Crown servant (For example, be part of the UK armed forces)
Junior ISA Explained
What are the Types of Junior ISA?
- A cash Junior ISA
- A stocks and shares Junior ISA
A cash Junior ISA
In a cash Junior Individual Savings Account you will not pay tax on the interest you earn from money saved.
A stocks and shares Junior ISA
From the money you invest your return on investment will not be taxed. So, any dividend you receive will not be taxed as it is exempt from income tax and capital gain tax.
You are allowed to own both types of Junior ISA at the same time. Although, you can only have one of each type of Individual Savings Account.
Your child can take control of the account when they are 16 but, can not withdraw money until they are 18.
How can I open a Junior ISA?
You must be a parent or guardian to open a Junior ISA for an under 16.
When opening a Junior ISA you must:
- Choose the types of Junior ISA you would like to open. This would be either a cash junior ISA or a stocks and shares Junior ISA.
- Choose an account provider.
- Get a form to apply for an ISA.
Note that 16 and 17 year olds can open their own adult cash ISA.
Where can I find an account provider?
There are a variety of ways to open a Junior ISA, here are a few options:
- Building Societies
- Credit Unions
- Friendly Societies
- Stock Brokers
- Other Financial Institutions
If you would like to learn more about opening a Junior ISA account then call for expert advice. Windows Financial Services will answer any questions you have regarding Junior ISAs and clarify and confusion.
We also recommend visiting your account provider in branch to receive in depth knowledge about the Junior ISA you are opening. You can also contact the account provider through calling – their number will be on their website. You will also receive the opportunity to ask them any question related specifically to the account you wish to open.
If you are struggling to decide which account provider to choose then there are tools available online that will compare the fine details of the accounts and help you find the best options for what you are looking for. When looking for a Junior Individual Savings Account provider remember to look at the interest rate to see if it is worth while saving money in the account.
How can I add money to the ISA?
Money can be added to the account by anyone who wishes to do so, but the sum amount can not breach the limit of £4,080 in the given tax year.
Note that you are unable to transfer money between an adult ISA and a Junior ISA.
Typically the child who the Junior ISA is for can not take out the money until they are 18, although there are some exceptions to this rule.
When a the child turns 18 the account will automatically turn into an adult Individual Savings Account.
If you would like to find out more about the details of a Junior ISA then call 0131 496 051. If you are unable to call right now then please visit contact us to leave us a message and Windows Financial Services will respond within 24 hours.