Updated 03 December 2020
University fees, saving up for a car, or the foundation for a house deposit. Teaching your little ones about the value of saving now will pay off in the future, says James Robson.
With Christmas gearing up, you may be wondering what to buy your little munchkins to unwrap from Santa. Although they may not thank you for it while theyâre tiny, a Junior Individual Savings Account (Jisa) may be one of the best gifts for their future that you could hide under the tree.
Junior ISAs are one of the governmentâs flagship savings vehicles for children and young people. Here are answers to the five most common questions weâve come across on Junior ISAs.
1.Â Â Â Â Â Â Who can have one?
All children who werenât eligible for a Child Trust Fund*.
2.Â Â Â Â Â Â How much can I save?
You can save Â£3,720 per year (2013/14) â usually starting from Â£10. From April 2014 this limit should rise.
3.Â Â Â Â Â Â Where does the money go?
Money can be saved into cash or invested in a range of funds.Â Junior ISAs are offered by most of the major banks and many investment houses.
4.Â Â Â Â Â Â Does the government top up the fund?
No â unlike child trust funds where the government would jump start the savings with a Â£250 Jisas are solely self-funded.
5.Â Â Â Â Â Â What are the downsides?
Money canât be accessed until the child turns 18 â BUT when the child is 18 itâs theirs – parents canât stop them accessing (and spending it).
Most children wonât pay any tax â so many of the tax benefits are not as advantageous as in adult ISAs.
*Child Trust Funds are now closed to new accounts. Children were eligible if they were born between 01/09/2002 and 02/01/2011.
>>>Speak to a Independent Financial Adviser near you to choose the right Junior ISA for your children.
About the author
James Robson is an Independent Financial Adviser at Plutus Wealth Management. He is originally from Yorkshire but has been living and working in London for the past eight years.