What are my options in regards JISA accounts for my children?

07 March 2022

Question by Lindsay

I have a 17 year old and a 15 year old. They both have an old CTF. I have not opened JISA for them. What are my options in regards JISA accounts for my children?


Answered by Tracey Che

Dear Lindsay,

The old Child Trust Fund (CTF) scheme closed in 2011 but you can continue to add up to £9,000 a year to an existing CTF until your child turns 18. Both the CTF and Junior ISA (JISA) are used for similar purposes but have subtle differences as listed below:

Same for both:
1. It is a long-term tax-free savings account for children - there are no tax to pay on interest for cash savings or capital growth/dividends for stock and share accounts
2. Your child can start taking control of the account when they turn 16, such as deciding how the fund is invested and changing the type of account from cash to stocks and shares but they can only access the money when they turn 18.
3. You can add up to £9,000 per year into the account.

Differences:
1. The allowance for the JISA runs in line with the tax year whereas the allowance for the CTF runs in line to the child's birthday.
2. A JISA will automatically turn into an adult ISA once the child turns 18 whereas for the CTF, the child will have to choose whether to take the money out or transfer the money to an adult ISA. Until your child withdraws or transfers, the money stays in an account that no one else has access to.

Please note that you cannot have an JISA as well as a CTF. If you would like a JISA, you must transfer the CTF into it.

Essentially, in both cases, your child will be able to access the money at age 18. If there are significant amounts of money in these accounts, it is important to start having conversations around investments and begin their financial education early on.

I hope this helps!

Tracey

Answered by

Tracey Che

Financial Planner

As a Financial Planner at Moore Kingston Smith, I provide holistic financial planning to high-net-worth individuals.