Starting strong - How Junior ISAs could help build your child's financial future
March 2024
Starting strong - How Junior ISAs could help build your child's financial future
March 2024
It’s always better to get a head start, especially when it comes to saving for a child’s future.
There are financial advantages to starting early. The longer a child’s money is held in a Junior Individual Savings Account (JISA), the more it will grow. Each year, the interest earned on the money in the account is added to the growing ‘pot’ on which the following year’s interest is calculated.
If you’re looking to help your child by creating a pot of savings ready for when they reach adulthood, a Junior ISA could be an ideal tool. Let’s take a closer look at how parents, or those with parental responsibility, can use a JISA to help build savings for their child’s financial future.
What's a Junior ISA?
A JISA is a tax-free savings account set up by a parent or guardian for a child under the age of 18 years old. Anyone can pay into the account, however only the child can access the money once they reach 18.
There are two types of JISAs, a cash ISA and a stocks and shares version. At Coventry Building Society we offer a Junior Cash ISA with a variable interest rate and interest paid and added to the account annually.
Currently, up to £9,000 can be paid into a JISA each tax-year which runs from 6 April to 5 April the following year. If the full JISA allowance is not used it can’t be carried forward, however, the allowance resets each year on 6 April.
How Junior ISAs work
If the child is aged under 16, a JISA can only be opened by a parent or someone with parental responsibility. They’re responsible for choosing the JISA provider and type of JISA. Once the child is 16 years old, they can choose to take over these decisions for themselves.
When your child turns 18, their JISA automatically converts into an adult cash ISA and the parent no longer has control. The tax-free benefit continues, and their ISA allowance will increase to £20,000 per year.
Whichever type of JISA you choose, the money is locked away until your child’s 18th birthday. This helps protect it for them and means they can use it for important future needs like education, buying a car or a deposit on their first home.
Helping your child by creating a pot of tax-free savings while they’re young will provide them with a solid financial foundation for their future. JISAs are a great place to start building that savings pot. Find out more about our Junior ISA product.
Additional information
Interest on ISAs is paid tax-free, that is gross with no tax deducted. ISAs are a savings scheme initiated by the Government and are subject to change by them. For example, the favourable tax treatment may not be maintained.
You may pay in up to the child’s maximum Junior ISA allowance each tax year depending on any money you may have already paid into a stocks and shares ISA for the child. For the current tax year, the allowance is £9,000.
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What's new in the world of ISAs
We're here to walk you through what’s new about ISAs at Coventry Building Society.
It’s always better to get a head start, especially when it comes to saving for a child’s future.
There are financial advantages to starting early. The longer a child’s money is held in a Junior Individual Savings Account (JISA), the more it will grow. Each year, the interest earned on the money in the account is added to the growing ‘pot’ on which the following year’s interest is calculated.
If you’re looking to help your child by creating a pot of savings ready for when they reach adulthood, a Junior ISA could be an ideal tool. Let’s take a closer look at how parents, or those with parental responsibility, can use a JISA to help build savings for their child’s financial future.
What's a Junior ISA?
A JISA is a tax-free savings account set up by a parent or guardian for a child under the age of 18 years old. Anyone can pay into the account, however only the child can access the money once they reach 18.
There are two types of JISAs, a cash ISA and a stocks and shares version. At Coventry Building Society we offer a Junior Cash ISA with a variable interest rate and interest paid and added to the account annually.
Currently, up to £9,000 can be paid into a JISA each tax-year which runs from 6 April to 5 April the following year. If the full JISA allowance is not used it can’t be carried forward, however, the allowance resets each year on 6 April.
How Junior ISAs work
If the child is aged under 16, a JISA can only be opened by a parent or someone with parental responsibility. They’re responsible for choosing the JISA provider and type of JISA. Once the child is 16 years old, they can choose to take over these decisions for themselves.
When your child turns 18, their JISA automatically converts into an adult cash ISA and the parent no longer has control. The tax-free benefit continues, and their ISA allowance will increase to £20,000 per year.
Whichever type of JISA you choose, the money is locked away until your child’s 18th birthday. This helps protect it for them and means they can use it for important future needs like education, buying a car or a deposit on their first home.
Helping your child by creating a pot of tax-free savings while they’re young will provide them with a solid financial foundation for their future. JISAs are a great place to start building that savings pot. Find out more about our Junior ISA product.
Additional information
Interest on ISAs is paid tax-free, that is gross with no tax deducted. ISAs are a savings scheme initiated by the Government and are subject to change by them. For example, the favourable tax treatment may not be maintained.
You may pay in up to the child’s maximum Junior ISA allowance each tax year depending on any money you may have already paid into a stocks and shares ISA for the child. For the current tax year, the allowance is £9,000.
Related articles:
What's new in the world of ISAs?
Take a look at the changes which are being introduced to ISAs.
