A Guide to

JuniorISAs

What is a Junior ISA?This incentive was launched on 1st November 2011. A Junior ISA is a long term tax-free savings account for children. Your child can qualify for one of these ISAs if:

• They are under the age of 18• Live in the UK• They do not already have a Child Trust Fund

There are two types of ISAs that your child can have and they are:

• A cash Junior ISA• A stocks and shares Junior ISA

A child can have one of each at one time and there is no tax to pay. Money can be put into a Junior ISA by anyone. The maximum amount allowed in a Junior ISA is £3,600 in a tax year. Any interest or gains will not be taxed. This will apply till 5 April 2013 and will then be updated annually in line with the Consumer Price Index (CPI). The maximum £300 a month investment could grow to more than £100,000 over 18 years if returns average 5% a year.1 The government will not invest any money into this, unlike the Child Trust Fund. Some providers are offering a 3% interest rate on Junior ISAs

Q. Who does the money belong to?A. Any money put into a Junior ISA is the child’s, but they will not have access to the money until they are 18. Once they have reached 18 they then can decide what they would like to do with the money. If they de-cide to keep the money in the Junior ISA then it will automatically be-come an ISA. At 16 the child can take responsibility of their accounts.

Q. How can I open a Junior ISA?A. If your child is under 16 years old, then someone with parental respon-sibility must open the Junior ISA for them. Children aged between 16 to 18 can open their Junior ISA themselves, but someone who has parental responsibility may open it for them. Children aged 16 could open an adult cash ISA and a Junior ISA. Many banks, building societies, credit unions, friendly societies and stock brokers will offer Junior ISAs.

To open a Junior ISA you must:

• Choose a Junior ISA from either cash Junior ISA or Stocks and Shares Junior ISA (or both).

• Choose a provider you wish to go with.• Fill out an application form from selected provider. You can get

complete applications by going to the provider in person, over the phone or over the internet.

02 JUNIOR ISA’S

A GUIDE TO JUNIOR ISA’S A GUIDE TO JUNIOR ISA’S

“If your child is under 16

years old, then someone

with parental responsibil-

ity must open the Junior

ISA for them.“

Q. What does that mean for Child Trust Funds?A. Unfortunately Child Trust Funds cannot be converted into Junior ISAs, but the contribution limit that is currently set to £1,200 will now be increased to £3,600 to match the Junior ISAs.This also means that Child Trust Funds may have less competitive rates because providers no longer feel that they need to offer competitive rates.

Q. How can the money be taken out before the child is 18?A. The money can be taken out of a Junior ISA before your child is 18 in certain circumstances, such as if they are terminally ill. This means that the child has an illness that they are likely to die of within 6 months.

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A GUIDE TO JUNIOR ISA’S

JUNIOR ISA’S

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