A Junior ISA (JISA) is a special savings account for children with tax benefits. JISAs allow you to save using two main types of investments:
- Cash: This includes bank and building society savings accounts and National Savings. These provide a very safe home for your money but can offer limited income and growth prospects.
- Stocks and shares: This includes shares and collective funds such as investment companies, unit trusts and other similar funds. These are more risky, but can offer the chance of better returns over the long term. If you cannot afford to lose the money you put into an ISA, or think you might need your money quickly, you should not invest in investment companies and should probably stick with cash investments.
The main features are:
- It is tax free. Your children won’t have to pay income tax on any dividends or capital gains tax when the shares are sold.
- Family and friends can contribute up to £4,260 each year. Children can have one cash and one stocks and shares JISA at the same time but this does not effect the limit – the £4,260 must be split between them.
- The investments in the account belong to your children. They can take control of the account when they are 16, but they will not be able to access the investments until they are 18.
- When they turn 18, the account will be converted into an adult ISA and can continue to grow tax free.
Learn more about Junior ISAs