How Much Can You Invest in a Junior ISA?

A Junior Individual Savings Account (JISA) is a long-term, tax-efficient savings and investment account designed for children in the UK. It allows funds to grow free from UK income and capital gains tax, providing a structured way to build a financial foundation for a child’s future.

Junior ISAs: A UK-Specific Savings Vehicle

A Junior ISA is part of the broader Individual Savings Account (ISA) framework in the United Kingdom. Funds held in a JISA grow free from UK income tax, capital gains tax, and tax on dividends. The annual allowance for Junior ISAs is £9,000 for the 2024/2025 and 2025/2026 tax years, resetting on April 6th.

This £9,000 limit applies to the total amount contributed across any Junior ISAs a child may hold in a single tax year. The allowance is specific to each child, allowing families with multiple children to contribute up to £9,000 for each child annually. Funds contributed to a JISA cannot be accessed until the child reaches 18 years of age.

Contribution Rules

Parents or legal guardians open a Junior ISA for a child. Once established, anyone can contribute to the account. The collective contributions must not exceed the annual investment limit for that child’s JISA in a given tax year.

Funds contributed to a Junior ISA legally belong to the child from the moment they are deposited. Account providers monitor contributions to ensure the annual limit is not surpassed.

Types of Junior ISAs

There are two types of Junior ISAs available in the UK. The Cash Junior ISA functions like a savings account, with funds earning interest.

The Stocks & Shares Junior ISA allows investment in assets like funds, shares, and bonds. While Stocks & Shares JISAs offer potential for higher returns, they also carry greater investment risk. The £9,000 annual contribution limit applies across both types of JISAs combined.

Accessing Funds and Maturity

Funds held within a Junior ISA are designed for long-term growth and are inaccessible until the child’s 18th birthday. At this point, the Junior ISA automatically converts into an adult ISA, and the child gains full control.

Once the account matures, the adult child can withdraw the money, continue to save or invest within the adult ISA framework, or transfer funds to another ISA provider. Withdrawals remain tax-free.

US Alternatives for Child Savings

Junior ISAs are specific to the United Kingdom’s tax system, meaning they are not available to residents of the United States. However, several tax-advantaged savings and investment options exist in the U.S. for families looking to save for a child’s future, often with different rules and tax implications. These accounts provide opportunities for growth while potentially offering federal or state tax benefits.

529 Plans

One common option is the 529 plan, a college savings vehicle. While there are no federal annual contribution limits for 529 plans, contributions are considered gifts for tax purposes. For 2025, individuals can contribute up to $19,000 per beneficiary without triggering federal gift tax reporting requirements, or $38,000 for married couples who elect to split gifts. A special rule allows for a lump-sum contribution of up to five years’ worth of the annual gift tax exclusion, totaling $95,000 for individuals or $190,000 for married couples in 2025, provided no further contributions are made for the subsequent four years. Earnings within a 529 plan grow tax-deferred and are tax-free when withdrawn for qualified higher education expenses, which can include tuition, fees, books, and room and board. Many states also offer state income tax deductions or credits for contributions to their respective 529 plans.

UGMA/UTMA Accounts

Another option includes Uniform Gifts to Minors Act (UGMA) and Uniform Transfers to Minors Act (UTMA) accounts, often referred to as custodial accounts. These accounts have no contribution limits set by federal law, though contributions exceeding the annual gift tax exclusion ($19,000 per individual in 2025) must be reported to the IRS and may reduce the donor’s lifetime gift tax exemption. The funds in UGMA/UTMA accounts legally belong to the child, and earnings are subject to the “kiddie tax” rules. For 2025, the first $1,350 of a child’s unearned income from these accounts is generally tax-free, the next $1,350 is taxed at the child’s lower tax rate, and any unearned income above $2,700 is taxed at the parent’s marginal tax rate. Unlike 529 plans, funds from UGMA/UTMA accounts can be used for any purpose that benefits the minor, not just education, and the child gains full control of the assets at the age of majority, typically 18 or 21, depending on the state.

Coverdell Education Savings Accounts (ESA)

A third alternative is the Coverdell Education Savings Account (ESA). This account has an annual contribution limit of $2,000 per beneficiary across all Coverdell ESAs established for that child, regardless of the number of contributors. Contributions to a Coverdell ESA are not tax-deductible. However, earnings grow tax-free, and qualified withdrawals for education expenses, including K-12 and higher education costs, are also tax-free. There are income limitations for individuals who wish to contribute to a Coverdell ESA. Generally, funds must be used by the time the beneficiary reaches age 30, or they may be subject to taxes and penalties.