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Junior ISAs explained

What is a Junior ISA?

‘ISA’ stands for Individual Savings Account, and it’s a tax-efficient way to invest. A Junior ISA is designed to make saving for your kids’ future easy. It works just like an ‘adult’ ISA, except the money can only be taken out by the child when they turn 18. When they turn 18, they also have the choice to keep their money invested in an ISA.

What types of Junior ISA are there?

There are two types:

Cash Junior ISA - works much like an ordinary savings account, except you don’t pay tax on the interest. It’s usually based on investments in bank and building society savings accounts, and some National Savings & Investments (NS&I) products.

Stocks and Shares Junior ISA - invests in funds, unit trusts, bonds and shares in companies. You can decide the exact make-up of your ISA, and you can change it whenever you like.
What’s the difference between a Junior ISA and a Child Trust Fund (CTF)?
There are two main differences:

• A Junior ISA gives you more say in what kind of assets your money’s invested in
• When your child turns 18 a Junior ISA can stay invested as an ‘adult’ ISA, while a CTF has to be converted into cash
What makes a Junior ISA tax-efficient?
As long as the investments are kept within a Junior ISA, you don’t have to pay income tax or capital gains tax on the growth of those investments. Any dividends received in the Junior ISA won’t impact your personal dividend allowance.
Who can open a Junior ISA?
You can open a Junior ISA as long as:

• You’re the child’s parent or legal guardian
• You’re aged 18 or over
• The child is under 18
• The child doesn’t have a CTF. If they do have a CTF and want to open a Junior ISA, you must transfer the entire CTF into the Junior ISA
• Your child is a UK resident

A child can only have one Junior ISA. However, a child aged 16 or 17 can open their own adult Cash ISA while holding on to their Junior ISA. Currently, this gives them a combined ISA allowance of £24,368. They can also manage their own ISA from the age of 16.

Please note, to open a VitalityInvest Junior ISA, you and your child must be UK residents. Or, if you don’t live in the UK, you must be a Crown Servant (for example diplomatic or overseas civil service) or their spouse or civil partner.
Is there a minimum amount I need to open a Junior ISA with?
There’s no legal minimum limit, but different ISA providers ask for different minimum amounts. The minimum amount to open a VitalityInvest Junior ISA is £100 per month, or a single payment of £1,500.
Can I take money out of my child’s Junior ISA?
Only your child can withdraw money from their account - and only when they reach the age of 18. The money is legally theirs. The only exception is if the child becomes terminally ill - then the registered contact (whoever opened the Junior ISA) may be able to take money out early.
How many Junior ISAs can my child have?
They’re allowed one Cash Junior ISA and one Stocks and Shares Junior ISA at any one time. You can currently divide the Junior ISA allowance of £4,368 between them however you like.
Can anyone else pay into a Junior ISA?
This will depend on your provider. Some providers will only allow the registered contact to pay into the Junior ISA, other providers will allow anyone to pay in. But the total amount contributed by everyone in one tax year can’t go over the allowance of £4,368.
How much can I pay in?
You can currently pay up to £4,368 each tax year into one child’s Junior ISA(s). That’s the allowance set by Her Majesty’s Revenue and Customs (HMRC). You can open one Cash Junior ISA and one Stocks and Shares Junior ISA for each child, and their allowance can be divided between the accounts.

For example, if you pay £1,000 into a Cash Junior ISA between 6 April 2019 and 5 April 2020, only £3,368 can be paid into their Stocks and Shares Junior ISA in the same tax year.
Can I transfer between Junior ISAs?
Yes. If you aren’t happy with the way your child’s Junior ISA is performing, you can transfer the money to a different provider at any time.

The time it takes to transfer between accounts depends on the provider it’s being transferred from, however it should typically take 15 working days for a Cash Junior ISA, and 30 working days for a Stocks and Shares Junior ISA.

Please note, you can’t transfer money between a Junior ISA and an ‘adult’ ISA.
Can I change the funds in my child’s Junior ISA?
Yes, you can do this any time you like. Just contact your ISA provider and choose which funds you want to change.
Are there any charges on a Junior ISA?
Not if it’s a Cash Junior ISA. However, if you invest in a Stocks and Shares Junior ISA, you’ll usually pay management fees.
My child has a CTF. Can I move the money into a Junior ISA?
Yes, transferring money from a CTF to a Junior ISA has been allowed since April 2015. But you’d need to close the CTF altogether, as your child can’t have a Junior ISA and a CTF at the same time.
What do I need to do once the plan is open?
The Junior ISA will be in your child’s name, but you’ll be the ‘registered contact’ - the only person who can:

• Change the account from a Cash Junior ISA to a Stocks and Shares Junior ISA, or vice versa
• Switch the Junior ISA to a different provider
• Update details such as changes of address or phone number
What happens to my child’s Junior ISA if I move abroad?
This will depend on the provider. If you move abroad you can still contribute to the Junior ISA so long as the provider will allow it. If the child moves abroad, you can also still pay money into their ISA, and it’ll still be tax-free.
What happens when my child turns 18?
The Junior ISA automatically converts to an ‘adult’ ISA, the child becomes the registered contact for the account. They then have control of the money, free to spend it, keep it invested in the ISA or re-invest it elsewhere.
What if I accidentally pay too much into a Junior ISA?
Don’t worry, HMRC will notice this has happened and contact you. The Junior ISA provider will then return the excess amount to you. But if you spot the error first, you can contact HMRC and let them know.
What if I don’t use this year’s allowance?
Then it’s gone for good. Junior ISA allowances can’t be carried over to the following year.
What if I want to invest for more than one child?
You can currently invest up to the allowance of £4,368 a year for each of them. For example, if you have three children under 18, you can invest a total of £13,104 in Junior ISAs each tax year.
Where can I get a Junior ISA?
They’re available from banks, insurance companies, building societies, credit unions, friendly societies and investment management providers.

Explore the VitalityInvest Junior ISA.
What’s the difference between an ISA and a Junior ISA?
With an ‘adult’ ISA you're usually allowed to close the ISA and take the money out whenever you like. With a Junior ISA, only the child you’re investing for can access the money – when they reach the age of 18. But they can manage the account from age 16. You can close and transfer a Junior ISA to another Junior ISA provider, but your child still can’t access until they turn 18. Also, the allowance for a Junior ISA is lower (currently £4,260 a year, for each child). You can invest this amount in cash, stocks and shares, or both.
Will I need to declare a Junior ISA in my tax return?
No, there’s no tax to pay on a Junior ISA, so HMRC doesn’t need you to give any information about it.
What’s meant by ‘tax year’?
Also known as the financial year, it runs from 6 April to 5 April.

Junior ISAs at a glance

• Invest tax-free for a child under 18
• The current annual Junior ISA allowance is £4,368
• The child takes control of the money at age 18
Explore VitalityInvest Junior ISA

Please note, any tax benefits you receive depend on your tax position as well as current tax law - both of which may change in the future.