Learn more about a Junior ISA….
If you’ve set up a Junior ISA to help boost your child’s savings then it’s important to know just how to make the best use of it.
While children as young as 7 years old begin forming financial habits and Personal Finance Education (PFE) is now being taught in all secondary schools, many youngsters may still not fully understand the complexities of savings accounts, interest rates and ISA limits.
As a result, parents need to be able to guide them through the process and help them make the best decisions with their money – and that means knowing what to do with a Junior ISA.
What is a Junior ISA?
Junior ISAs are a tax-free account that encourages parents to begin saving for their child’s future.
Any money that is put into this account will be secure until the child reaches 18 years of age and the maximum amount of money that can be deposited is currently £4,000 per year with a new allowance likely to be announced in the upcoming tax year (2015/2016).
As a parent, you will have full control over a Junior ISA until your child is at least 16 years old after which point they may be able to take over some responsibilities.
How do I get a Junior ISA?
Junior ISAs are available from a number of different providers including banks and building societies. Different providers will have different rates so it is important to shop around. You can often apply online or in branch.
Can your child get a Junior ISA?
If your child is under the age of 18 and was born in the UK then they are eligible for a Junior ISA. Parents will need to fill out the application form on behalf of the child but you can also open a Junior ISA for a child if you are their guardian.
Junior ISAs are not currently available for children who have a Child Trust Fund.
What happens when the child is 16 years old?
Once your child reaches the age of 16 years they will be eligible to take over the account and complete some duties – although they still cannot withdraw any money until they are 18 years old.
Once they reach 18 years old they will no longer be able to use a Junior ISA but can transfer the funds they have saved into an adult ISA or other savings account.