What Is a Junior ISA? And How Does It Work?

A Junior Individual Savings Account (Junior ISA or JISA) is a savings and investment account for children in the United Kingdom. It helps families save and invest for a child’s long-term financial future in a tax-efficient manner. This government-backed scheme allows money to grow without certain UK taxes, offering a potential head start for young individuals.

Understanding Junior ISAs

A Junior ISA is a tax-free savings and investment account for children under 18. Interest from cash savings or capital gains and dividends from investments within a JISA are exempt from UK income tax and capital gains tax. This tax efficiency allows savings to compound more effectively, potentially leading to a larger sum upon maturity.

Eligibility requires the child to be under 18 and a UK resident. Children cannot hold both a Junior ISA and a Child Trust Fund (CTF) simultaneously; a CTF must be transferred to open a JISA. Money deposited into a Junior ISA legally belongs to the child, but they cannot access these funds until age 18, except in limited circumstances like terminal illness. This restriction ensures the money is preserved for significant future needs, such as higher education, a first home deposit, or starting a business.

Contributions and Investment Options

The annual contribution limit for a Junior ISA is £9,000 for the 2025/2026 tax year. This allowance resets on April 6th each year and cannot be carried over. While a parent or legal guardian opens the account, anyone can contribute funds, provided total annual contributions do not exceed the limit.

Contributions can be made via lump sums or regular direct debit payments. The Junior ISA framework offers two main account types:

A Junior Cash ISA operates like a traditional savings account, earning interest and suitable for capital preservation.
A Junior Stocks and Shares ISA allows investment in assets like funds and shares, offering potential for higher returns but also greater risk.

A child can hold both types, but combined contributions must not exceed the overall annual allowance.

Opening and Administering a Junior ISA

A parent or legal guardian with parental responsibility opens a Junior ISA and acts as the “registered contact” until the child turns 16. Required information for opening an account include:

The child’s full name, date of birth, and address.
Proof of identity and address for the person opening the account.

When choosing a provider, consider factors like the types of ISAs offered, fees, investment options, and customer service. Applications can be completed online, via paper forms, or in person. Children with a Child Trust Fund (CTF) can transfer these funds into a Junior ISA by contacting their chosen JISA provider, who will arrange the transfer and close the CTF account. Existing Junior ISAs can also be transferred between providers, initiated by the new provider.

The registered contact manages the account, including making investment decisions and changing allocations within a Stocks and Shares JISA. While the child cannot access funds before age 18, they can manage their own investments from age 16. The registered contact is also responsible for reporting changes in circumstances to the provider.

What Happens at Age 18

When a child turns 18, their Junior ISA automatically converts into an Adult ISA. This transition maintains the account’s tax-efficient status. The converted Adult ISA is held in the young person’s name, granting them full control and access to the funds.

At 18, the young person has several options:

Withdraw all or part of the money for immediate use, such as for higher education or a property down payment.
Keep the funds invested within the Adult ISA for continued tax-efficient growth.
Transfer the funds to a different Adult ISA provider for more suitable options.

Young people should be aware of these options and consider seeking advice to manage their matured savings effectively.