What Is Junior ISA?

Junior ISA is a savings and investment account that is tax free. It is for children and its main goal is to help parents save for their child’s future. This type of ISA was launched on November 1, 2011 and it requires parental responsibility. This ISA was launched by the government in order to replace Child Trust Fund. The Junior ISA does not allow a child to withdraw unless he has turned eighteen. The limit for 2012 and 2013 for this ISA is £3, 600.


What Are Types Of Junior ISA According To The ISA Guide?

Like the adult ISA, there are two types of Junior ISA and they are

  • The Junior cash ISA’s

This type of ISA is like your typical savings account. But for this one, you have a limit of £3, 600 for each tax year. The money you put into this account allows your child’s money to earn interest without paying any interest. This type of Junior ISA can be in fixed rate of variable rate depending on which option you choose. Also, you may either pay regularly or occasionally or you may choose to pay a lump sum.

  • The Junior investment ISA’s

This type of Junior ISA allows your child’s money to earn form investment without worrying about tax. The limit for this ISA is the same as the cash ISA which is £3, 600 and is not answerable to capital gains or income tax although you will be charged with management fees because it is applicable to this kind of ISA. If you choose this ISA for your child, you are given the option to choose which type of investment you want. You may also decide whether to pay regularly or invest a lump sum.


Who Can Have A Junior ISA?

First and foremost, a child has to be a resident of United Kingdom in order to avail of a Junior ISA. He must be under eighteen and has not qualified for a Child Trust Fund. Children who will qualify must have been born before September of 2002 and after January of 2011. Although there are no means of transferring a Child Trust Fund to an ISA as of the moment, there may be possibilities in the future.


ISA Guide Suggestions For Choosing A Junior Cash And Investment ISA

  • The first thing to do is compare. Check all the details regarding the different types of Junior ISA’s. Knowing the essential details will help you come up to a conclusion.
  • Next is to decide. Do you want cash ISA for your child? Or would you rather have his money invested? It is important to be decided on this matter because it will help you prepare the amount you will need to start off. Another thing to ponder on is whether to pay a lump sum or pay a specific amount on a regular basis.
  • Once you have made up your mind, apply for the ISA you want. The ISA guide suggests that you do this at once so that your child’s money can earn more interest.