Junior ISAs

Posted on March 12, 2018 by - Uncategorised

Why a Junior ISA

Fund the cost of university or simply give your child a financial head start
 Same tax benefits as a standard Cash ISA or Stocks & Shares ISA
Anyone can contribute (parent, grandparents, extended family and friends)
Open a Junior ISA with an initial investment of just £50

How Does a Junior ISA Work?

A Junior ISA is similar to a regular ISA in that it protects the investment from income and capital gains tax. You can also transfer money between Cash and Stocks & Shares Junior ISAs. A child can only hold one Cash Junior ISA and one Stocks & Shares Junior ISA.

Where Junior ISAs differ is who owns the investment. Decisions on where to invest contributions are made by the child’s parents, but the money is held in the child’s name. Management of the Junior ISA passes to the child when they reach 16.

The money is locked away until the child reaches 18 and no withdrawals are permitted before this point (expect for terminal illness or death). At 18 years, the Junior ISA is rolled into a regular ISA automatically. Once a Junior ISA is opened, anyone can contribute.

“Junior ISAs are tax-free savings accounts millions of under-18s can save or invest up to £4,128 in this tax year. They then remain tax-free until their 18th birthday, when it gets converted into an adult ISA.”

1st Financial Foundations use a platform called True Potential for the Junior ISA. You benefit from their award-winning Wealth Platform technology that allows you to:

Invest in a world-class range of funds, including our exclusive Wealth Strategy Fund Range, plus
  • Set a goal for your Junior ISA
  • Track your Junior ISA towards your goal on a personal client site
  • Monitor your Junior ISA via our iOS and Android apps
  • Top up your Junior ISA from £1 on-the-go with impulseSave®
  • Invest from just £50
  • Contact your 1stFF Independent Financial Adviser directly via secure message
In addition, they have kept charges low so that you have the potential for greater returns. With the Junior ISA, you pay:
  • No initial charge for the tax wrapper
  • No annual charge for the tax wrapper
  • No dealing charges
  • No penalties for withdrawals

What If I Have a Child Trust Fund?

Child Trust Funds, which were available for children born between 1 September 2002 and 2 January 2011, were similar to Junior ISAs. However, due to a lack of competition and the popularity of Junior ISAs, Child Trust Funds often have unreasonably high fees.

The parent that set up the Child Trust Fund can transfer it to a Junior ISA without losing the tax-free status of the money or using up the annual allowance.

If you are thinking of transferring a Child Trust Fund, check the charges you may have to pay first and speak to your financial adviser as 1st Financial Foundations 01908 523 420 if you need help.

Thank you for reading – 1st Financial Foundations 

Your capital is at risk. Investments can fluctuate in value and you may not get back the amount you invest. Past performance is not a guide to future performance. Tax rules can change at any time.