The Junior ISA is a version of the long-standing and popular ISA, but aimed at parents, guardians and grandparents who wish to save for a child's future. There are some differences, one being the annual contribution, which is £4,128 for the 2017/18 tax year. However, the ISA advantages of no capital gains tax and no further liability to income tax are the same.
The Junior ISA could be used for university costs, house deposits, a wedding or possibly a car. Alternatively, at the age of 18, the Junior ISA will automatically be rolled into an 'adult' ISA and remain invested.
As an illustration, if you invest the full Junior ISA allowance of £4,128 today and hold it for 18 years (assuming 7% p.a. annual growth) this amount will increase to £13,952. If you were to invest the same amount in cash (assuming 2% annual growth) this amount would be only £5,896.
A child under 18, who is resident in the UK and is not eligible for a Child Trust Fund (CTF). Any child born on or after 3rd January 2011 and any child under the age of 18, who was born before September 2002, will be eligible for a Junior ISA.
To make it as easy as possible to invest in a Junior ISA, our research team has produced three Junior EasyISA portfolios to help you maximise your returns over the long term. These are simply suggested portfolios, which are split equally between three funds. As the Junior EasyISA is aimed at children and, consequently, the investment term is generally longer, they offer a broad equity spread and therefore it should be noted that they may be subject to greater volatility than the terms Cautious or Balanced may suggest.
Our Junior ISA guide explains in greater detail how the Junior ISA works, who can invest in it and what the benefits are.
Please note that children with Child Trust Funds (CTFs) cannot currently hold a Junior ISA. However, subsequent to our lobbying, the government has consulted on this issue and you can now transfer a CTF to a Junior ISA. Download the transfer form.