What Is the Junior ISA Allowance and How Does It Work?
Understand the Junior ISA allowance and how this tax-efficient savings account helps secure a child's financial future.
A Junior Individual Savings Account (JISA) offers a long-term, tax-efficient savings and investment solution designed specifically for children. Its primary purpose is to allow funds to grow free from UK income tax and capital gains tax, maximizing potential returns. This dedicated savings vehicle ensures contributions are set aside for the child’s benefit.
Understanding the Junior ISA Allowance
The Junior ISA has a specific annual contribution limit, or allowance, which resets each tax year. For the 2025/2026 tax year, the maximum contribution is £9,000. This allowance applies per child, not per account or individual contributor. All contributions from parents, grandparents, or other family members and friends collectively count towards this annual threshold.
This annual allowance cannot be carried over to subsequent tax years if unused. If total contributions exceed the £9,000 limit within a tax year, excess funds are typically held in a separate savings account in trust for the child and cannot be returned to the donor. The allowance can be split between a Cash Junior ISA and a Stocks & Shares Junior ISA for the same child, provided the combined total does not exceed the annual maximum.
Eligibility and Opening a Junior ISA
To be eligible for a Junior ISA, a child must be under 18 years old and reside in the UK. Only a parent or legal guardian with parental responsibility can open a Junior ISA account on behalf of an eligible child. Children cannot open their own Junior ISA until they reach age 16.
Opening a Junior ISA involves selecting a provider, such as a bank, building society, or investment firm. There are two main types: a Cash Junior ISA, which functions similarly to a savings account with interest, and a Stocks & Shares Junior ISA, which involves investing in various assets like funds or shares. Many providers allow opening one of each type, provided total contributions remain within the annual allowance.
Contributing to a Junior ISA
Once a Junior ISA is established, various individuals can contribute funds. While only a parent or legal guardian can open the account, parents, grandparents, other family members, and friends are all permitted to pay money into it. All contributions made by these different individuals must collectively remain within the child’s single annual Junior ISA allowance.
Contributions can typically be made through various convenient methods, including direct debits for regular payments, one-off bank transfers, or cheques. A foundational aspect of the Junior ISA is that once money is contributed, it legally belongs to the child and cannot be withdrawn by anyone until the child reaches 18 years of age. The only exception to this rule is in specific, rare circumstances, such as terminal illness of the child.
Accessing Funds at Age 18
Upon the child’s 18th birthday, their Junior ISA automatically transitions into an adult ISA. This conversion grants the now-adult child full control and access to the accumulated funds. At this point, the individual has several options regarding the money. They can choose to withdraw all or part of the funds for immediate use, such as for higher education, a first car, or a housing deposit.
Alternatively, the individual can opt to keep the funds invested within the newly converted adult ISA, allowing the savings to continue growing under adult ISA rules and allowances. They also have the flexibility to transfer the funds to a different adult ISA product that better suits their financial goals, such as a Cash ISA, Stocks & Shares ISA, or Lifetime ISA. The funds are then subject to the annual adult ISA allowance, which is a separate and higher limit than the Junior ISA allowance.