Save for the kids and keep the taxman's paws off! Help your kids to build a nest egg for a deposit on a flat. Uni fees. Driving lessons? Or to pay you back for all those early mornings!?
Child Trust Funds have bitten the dust and Junior ISAs are the new tax-free way to save for the kids. You can open up a JISA online in less than half an hour – and then you, friends or a nice grandparent can pay into this.
All children resident in the UK are eligible for a JISA. You can pay in a maximum of £4,128 a year for each child. This JISA then automatically converts to an adult ISA when they are 18.
The children get access to the money when they're 18. Worried they'll spend it all on motorbikes and full moon parties? Biggest provider Hargreaves Lansdown tell us that over 95% just transfer to adult ISAs and the kids keep saving.
You can save into cash or the stock market. Most Junior ISAs taken out in the UK are in cash. But if you are saving for someone who is still into Thomas the Tank Engine, the chances are that this is a very long-term investment. They can't withdraw the money until they are 18. And over 18 years, shares are 99% more likely to do better than cash... Those odds are worth thinking about.
We'd go as far as to say that a cash JISA for anyone under the age of 12 or 13 is probably not the best option... unless we return to interest rates of 5%+ which we don't anticipate any time soon!
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We made this video back in 2016 – just NB since then the annual limit has risen to £4,128.
If you're investing over the long-term for a little one, we think you're likely to do better in shares than cash. But returns aren't guaranteed so read up on risk first.
If you can spare £25-£50 a month, or have a lump sum of about £500, you can usually set up a JISA.
Your children will benefit from a saving pot which could do nicely in the stock market, ticking away in the background for 18 years.
These make sense for higher-income earners looking to keep as much away from the taxman as possible. Without some dodgy scheme! If you have the spare money, and you are a perfect "David-Cameron-would-approve" married with two kids, you can use your adult ISA allowance of £20,000 x 2 AND the Junior ISA allowance of £4,128 x 2. That's a big annual stash to shield from the tax man.
If you have an old Child Trust fund, you can sometimes move these over to a Junior ISA. It's usually a better option with typically lower fees and more investment choice.
You can't open a Junior ISA if you have an old CTF still knocking about so if you want the more modern ISA you'll have to bite the bullet and move the CTF.
Charles Stanley and Hargreaves Lansdown are examples of firms which will accept transfers in from Child Trust Funds.
See which Junior ISAs we rate and why – or see what other parents have to say.