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What Is a Junior ISA?

There are two main types of Junior ISA: a cash Junior ISA and a stocks and shares Junior ISA

There are two main types of Junior ISA: a cash Junior ISA and a stocks and shares Junior ISA

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What Is a Junior ISA?

It’s never too early to try and set your children up for the future financially. However, trying to figure out the best way to do this can be difficult. Standard savings accounts often don’t provide enough long-term value, so it’s important to take stock of some of the other options available. This is where a Junior ISA can come into play.

Junior ISA stands for Junior Individual Savings Account. These are long-term, tax-free savings accounts that can be set up for anyone under the age of 18 living in the UK. This allows you to build up a fantastic resource for your child’s future that’s completely locked away until they become eligible to open it.

Understanding Junior ISAs

For someone to be eligible for a Junior ISA, they must be under the age of 18 years of age and living in the UK. However, there are some notable exceptions for children outside of the UK, such as a parent being a Crown servant, or being dependent on a parent within the UK. These accounts can only be opened by a parent or guardian of the child, and the funds cannot be touched until the child is 18 — however, control of the fund does move to the child at the age of 16.

There are two main types of Junior ISA:

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

For both, no tax is paid on the money contributed, the money in the account, or the interest/dividend growth accrued. This makes a Junior ISA incredibly valuable, potentially enabling significant growth when compared to other savings methods.

Also, while a parent or guardian is required to open the account, anyone can pay into it. This allows family members or friends to also contribute, making it a brilliant option as a present or gift. Up to £9,000 a year can be put into the account, and your child can have both types of Junior ISA — they’re not limited to having to pick between them.

Benefits of Junior ISAs

There are a whole host of advantages to opening a Junior ISA for your child. The first, and arguably the biggest, is the huge potential for growth offered. Compound interest, whereby you continue to earn interest on interest previously earned, can supercharge financial growth if given long enough. 


For example, if you max out the cash deposit allowance each year of £9,000 and start when your child is 10, you’ll save a total of £72,000 in eight years, but this will become close to £86,000 at a 5% annual interest rate. However, if you do the same but begin when your child is born, you’ll save £162,000 over 18 years, but will end up with a total of £253,000.

You’ve gone from under a 20% gain to a 56% gain just by having the money in longer, all due to compound interest.

Another advantage is the ability to impart foundational financial education to your child through discussing the Junior ISA and how it works. You can teach the concept of saving, how interest works, and the overall importance of long-term planning when it comes to finance. Having a tangible example — particularly one that belongs to the child — will greatly help get your points across.

Opening and Managing a Junior ISA

Opening a Junior ISA for your child is a relatively straightforward process. First, make sure that you and your child fulfil the eligibility requirements outlined above. Next, consider your financial situation and figure out what your financial risk tolerance is. This will help you decide whether you want to open a cash or a stocks and shares Junior ISA. Stocks and shares Junior ISAs are inherently more risky, as the value of these equities could always go down. However, the potential for reward can also be much higher than a typical cash account.

Next, you should research providers by looking through fees, the reputation of the provider, and interest rates on offer for cash Junior ISAs or what investment options are available for stocks and shares Junior ISAs.

Before you visit your chosen provider, you should begin gathering the relevant documentation needed for the process. This includes:

  • Proof of your identity
  • Proof of your child’s identity
  • Proof of address
  • Your child’s National Insurance number
  • Your bank account details

Now you should be in a fantastic position to contact your chosen provider if you haven’t already done so. Make sure to take the time to talk through your various options and to take their advice onboard. They’ll bring you through the application process, which can be done in person, online, or over the phone.

Once this is complete, you can begin to make contributions to the fund. These can be done ad-hoc or can be set up to be debited automatically. Automatic contributions will likely be the easiest method for most, as this ensures consistent growth of the account that can be monitored and managed.

The role of your financial adviser can’t be understated throughout this process. You must find a reputable provider that you can trust. It’s their job to try and maximise your returns, manage risk appropriately as determined by you, and react to market conditions to ensure the continued growth of the account.


Junior ISAs provide parents or guardians with a potent means to change their children’s lives for the better. You can take control of their future finances from the beginning of their lives, and set them up brilliantly to succeed in life. You can also use a Junior ISA to teach your child the importance of financial literacy and help instil vital skills in them that will only benefit them down the line.

For personalised advice on what would be best for you and your child’s future, why not contact us here at The Openwork Partnership? We pride ourselves on offering bespoke advice to help you and your family make an informed decision that will benefit your child for the rest of their life. 

An ISA is a medium to long-term investment, which aims to increase the value of the money you invest for growth or income or both. The value of your investments and any income from them can fall as well as rise. You may not get back the amount you invested.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

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