Financial Planning for Step Children 3 - ISA
Published / Last Updated on 18/01/2022
What is a Junior ISA?
A Junior ISA is a long-term tax efficient savings account for children. It is free from mainstream income taxes and capital gains taxes and operates in a similar way to Adult ISAs with a yearly savings allowance with one major difference in that the child takes over control of the Junior ISA from the parent or guardian at age 16 and can encash or do as they wish with the Junior ISA at age 18.
Who can open a Junior ISA?
A Junior ISA can only be opened for a child by a parent or legal guardian.
Who can pay into a Junior ISA?
Anyone can make a contribution to a Junior ISA for a child up to the Junior ISA annual savings limits. This can be parents, grandparents, step-parents, friends and relatives.
Where is it invested?
Junior ISAs can be cash ISAs or stocks and shares ISAs. If grandparents, step-parents, friends and relatives invest in the Junior ISA, they have no control or say where the funds are invested. When a non-parent/guardian makes a payment into a Junior ISA, the funds will usually remain in a cash holding account until the parent or legal guardian gives instructions as to where the funds should be invested.
