Junior ISAs – saving for the next generation

One of the most common questions we hear when speaking with people about their financial objectives is how they might assist their children or grandchildren. There are several ways this can be done, but one of the simplest and most tax-efficient methods is via a Junior ISA (JISA).

A JISA must be set up by a parent or guardian, but once set up, grandparents, other family members, and even friends, can all potentially contribute to the account on behalf of the child. As with a normal ISA, any interest or investment growth is completely exempt from tax, making them highly tax-efficient.

There are two types of JISA - cash, and stocks & shares. A child will be able to hold one of each of these accounts, and the maximum which can be paid into the accounts is currently limited to £9,000 per annum in total. Payments into the JISA can be made on a regular monthly basis, or they can be made as one-off or occasional deposits.

Although a parent must set up the JISA, the account is in the child’s name and belongs to them. They cannot however gain access until they are 18 years of age, and no money can be withdrawn from the account until this time. However, once the child turns 18, they become absolutely entitled to the money contained within the account, and they can spend it as they wish.

JISAs can potentially be used to save towards any number of things, from buying a first car or helping pay for university, to saving for a deposit for their first home. However the monies are utilised, a JISA can potentially give a child a great start to their adult life.

Contact our team to find out more about how we could help you. Call 01954 233650 or email financial@gibbsdenley.co.uk.

This article is for information only, and does not constitute financial advice. The value of investments can fall as well as rise, and you may get back less than the amount originally invested.

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