Introduction to Junior ISAs

What is a JISA?

Junior ISAs (JISAs) are designed to allow a parent or guardian to save or invest for the benefit of a child. They act as 'tax wrappers', allowing the money or investments in the account to grow tax-free. There are two types of JISAs currently available:

  • Cash JISAs - Savings accounts where any interest earned is tax-free
  • Stocks & shares JISAs - Designed for those who want to invest for the longer term and who want tax-free investment income and gains

A child can have a maximum of one cash and one stocks & shares JISA at any time and total contributions paid into a child’s JISA accounts are currently limited to £9,000 in any tax year.

All of the money in a JISA belongs to the child and the account is managed by a ‘registered contact’ who will usually be the parent or guardian. When the child turns 18, they take over the management of the account at which point the JISA becomes an Individual Savings Account (ISA). At this point, only the child will have access to the money held in the account and can make withdrawals if they wish to.

We look at the differences between cash and stocks & shares JISAs below.

Differences between a stocks & shares JISA and a cash JISA

What to consider Stocks & Shares JISA Cash JISA
Maximum investment allowance in 2020/21 tax year £9,000
Shared between a child’s cash and stocks & shares JISAs.
£9,000
Shared between a child’s cash and stocks & shares JISAs.
Investment options You can choose from a wide range of investments options including funds, shares, investment trusts and exchange traded funds (ETFs). Offered mainly by banks and building societies, interest is applied on the savings at a fixed or variable rate.
Returns on the JISA All income and gains on investments are tax-free. Investing for the longer-term can offer the prospect (but no guarantee) of achieving better returns than cash. Remember that when holding cash for long periods of time, there is a risk that the value may not keep pace with inflation.
Taking the money out Money cannot be withdrawn from a JISA before the child's 18th birthday except in the event of the child's death or diagnosis with a terminal illness. Money cannot be withdrawn from a JISA before the child's 18th birthday except in the event of the child's death or diagnosis with a terminal illness.