How to save for the kids with a Junior ISA
By Boring Money
28 Mar, 2025
If you want to save for your children's future, sometimes an old-fashioned piggy bank just won't cut it. One popular option for families wanting to save or invest money on behalf of the kids is the Junior ISA (JISA). This tax-free savings account can help you to save cash or invest in the stock market for your child to inherit when they turn 18. But how do they work and are they any good?
Key facts about Junior ISAs
Who can open a Junior ISA?
The money in a JISA is locked away until the young person's 18th birthday, but here's the catch: once they turn 16, they can start making decisions about their money, meaning they can go in and change the underlying investments if they so wish. Then at 18, they gain full control of the account and can do whatever they wish with it - withdraw all their funds in one go, for example! The good news is that in reality, data suggests this doesn't really happen and most Junior ISAs roll over to adult ISA accounts, and the savings habit continues. It's also worth bearing in mind that Junior ISAs are not flexible accounts, meaning that you can't easily withdraw funds from them unless under very strict circumstances such as terminal illness or the closure of the account.
How do Junior ISAs work?
Which you go for is up to you, but there's two key factors to consider when deciding: How comfortable are you with stock market risk and how long until your child turns 18? The younger the child, the more it makes sense to consider the Stocks & Shares variety. This is because over long periods of time they will be more likely to ride out any volatility in the stock market and see their investments increase in value (though of course this is not at all guaranteed). Keeping their future savings in cash, on the other hand, may feel like the safer option but leaves it exposed to inflation, which over time can erode its purchasing power - meaning the money you tuck away for them today could be worth less in the future. Or your child can have one of each (a Cash JISA and a Stocks & Shares JISA) so long as the total amount does not exceed the annual allowance - more on this below.
How much can you put in a Junior ISA?
You can put a maximum of £9,000 into Junior ISAs every tax year and this money is completely shielded from tax. This means that any interest you earn on a Cash JISA, or any investment gains or dividends you earn in a Stocks & Shares JISA, will not be liable for Income Tax (which can be as high as 45%), Capital Gains Tax (as high as 20%) or Dividend Tax (up to 39.35%). This could save you thousands of pounds in tax every single year and means your child is really getting every penny you put in for them. Your £9,000 annual allowance can also be split across multiple Junior ISAs, so you could - for example - put £5,000 in a Cash JISA and the remaining £4,000 in a Stocks & Shares JISA.
Is a Junior ISA worth it?
The answer to this question very much depends on your unique financial situation. Let's run through a few factors you might want to consider.
How old are your children?
If your kids are on the younger side - at least 16 or younger - then a Junior ISA can be a great way of gradually adding to a savings pot for them over several years without having to worry about tax on interest, dividends or investment gains. However, if they're in their mid to late teens already, then you could set up an adult Cash ISA instead. Anyone aged 16 or over can set up a Cash ISA (although you must be 18 to open a Stocks & Shares ISA). The main difference here is that the annual allowance for a Cash Junior ISA is £9,000, whereas an adult Cash ISA lets you tuck away up to £20,000 - more than double. So if you want to save a lump sum worth over £9,000 for your 16-17 year old then an adult Cash ISA might make more sense than a Junior ISA.
How much money are you saving for them?
Another factor that can help you decide whether a Junior ISA is worth it or not is how much you intend to put into the account. If you're giving your child small amounts of pocket money from time to time then setting up a JISA may be more hassle than its worth and you might prefer to have them use a pocket money app or a good old-fashioned piggy bank instead. However, if you're saving larger amounts of cash - particularly over a longer period of time - this could accrue interest (if it's a cash savings account) or investment returns (if it's in an investment account) which go over the taxable threshold.
Example 1: Saving in cash for your kids
Let's say you were saving for your kids with a regular cash savings account. Interest rates are currently quite high and so could go over the £1,000 annual Personal Savings Allowance - at which point it will become liable for Income Tax. A cash Junior ISA, on the other hand, is ringfenced from tax. So you wouldn't need to worry about it at all!
Example 2: Investing on behalf of your kids
Alternatively, if you were investing money on behalf of your kids in a General Investment Account (GIA) - a non tax-efficient type of investment account - any dividends or gains (profits) it earned could be liable for Dividend Tax and/or Capital Gains Tax. This could eat away profits by as much as 39.35% depending on your tax bracket! A Stocks & Shares Junior ISA, however, keeps all your dividends or gains tax-free.
Holly Mackay's expert view
We asked our Founder & CEO Holly Mackay for her thoughts on Junior ISAs and whether they're a good investment for your family.
Every child can have a Junior ISA and have up to £9,000 a year paid into this, and any profit on this money will remain tax-free. So if you're Lord and Lady Muck, with 2 aristocratic children, that could be £20,000 each into your adult ISA and £9,000 each for the kids. That's equal to £58,000 per family every year in tax-quarantined savings. Nice! You can set them up with relatively small amounts, typically from around £50 - £100, and then ask relatives to pay into this on birthdays or Christmas. Little and often is OK. A key barrier for many though is not knowing where to start or who to pick. We awarded select Junior ISA providers with our coveted Best Buy JISA award in 2025. These have been given the thumbs up by our community as well as sense-checked by us. They all have easy options to support a sensible, diversified portfolio which doesn’t require you to do the hard work in setting up or monitoring!
Can I transfer a Child Trust Fund to a Junior ISA?
Locate a lost Child Trust Fund
Child Trust Funds (CTFs) - the predecessor to the Junior ISA - were phased out in 2011 and no one has been able to open one since, but there are still millions registered to children that have not yet turned 18. It's worth checking to see. Some teenagers might not be aware that there's a pot of cash in their name waiting to be claimed. If you think your kids might have one, you can track it down using this HMRC guide to locating a lost Child Trust Fund.
How to transfer a Child Trust Fund to a Junior ISA
If your child does have a CTF, you cannot open a Junior ISA under their name. But the good news is that in many cases you can transfer the funds from a CTF to a Junior ISA (and then close the CTF). This is especially good news for kids who have a Cash CTF, as the interest rates on these tend to be very poor - most providers have long-since abandoned raising rates in line with their other products! However, not all JISA providers allow you to transfer funds from CTF, so it's worth checking their website or getting in touch to ask if it's possible.
What are the best Junior ISAs?
