History and Introduction to Junior ISA

Published / Last Updated on 10/11/2023

Before 2005, when parents or grandparents opened investment accounts or bank accounts for children, you registered/nominated the account for the child.  This means that the account could then grow tax free, or the interest added to the bank account with no deduction of tax from interest.  In addition, you could also open friendly society plans for children.

January 2005 – Child Trust Fund

The Labour Government introduced Child Trust Funds (CTF) for all children born after 01/09/2002.  To encourage parents to save for their children as well as then encouraging young adults to save and value money when they took control of their CTF at age 16, the government also made payments into each CTF as well as additional contributions for children in lower income families.  Child trust funds were tax free with a yearly maximum savings allowance that could be invested each year.

January 2011 – Child Trust Fund Stops

Under the newly elected Conservative/Liberal coalition government, new CTFs were stopped and ongoing government contributions to existing CTFs were stopped on 3 January 2011.  Parents could continue to contribute to existing CTFs and benefit from tax free growth for their children.

November 2011 – Junior Individual Savings Account (Junior ISA)

The coalition government launched Junior ISAs for all children not eligible for CTFs i.e., those born before 01/09/2002 and after 03/01/2011.  Junior ISAs operate in a similar way to adult ISAs in having a yearly allowance (to match the CTF yearly allowance) and able to invest in cash Junior ISAs and/or Stock Junior ISAs.  Junior ISAs had greater provider choice and fund choices when compared to CTFs.

April 2015

Child Trust Funds were allowed to be converted Junior ISAs to provide access to wider fund choice etc.

Eligibility for Junior ISAs

  • Must be UK resident or the child of a Crown employee working overseas.  A yearly contribution allowance for Junior ISAs is available each tax year.  At age 16 the child takes over control of the Junior ISA that they can either cash in at age 18 or convert to an adult ISA.
  • The current Junior ISA allowance is a maximum yearly contribution for tax year 2023 of £9,000.00.
  • Junior ISAs invest tax free in the same types of funds and investments as adult ISAs such as cash and stock market related funds in any combination up to the allowance.
  • In special circumstances, a Junior ISA can be accessed before age 18.

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