Why a Junior ISA?
Fund the cost of university or simply give your child a financial head start
Same tax benefits as a standard Cash ISA or Stocks & Shares ISA
Anyone can contribute (parent, grandparents, extended family and friends)
Open a Junior ISA with an initial investment of just £50
How Does a Junior ISA Work?
A Junior ISA is similar to a regular ISA in that it protects the investment from income and capital gains tax. You can also transfer money between Cash and Stocks & Shares Junior ISAs. A child can only hold one Cash Junior ISA and one Stocks & Shares Junior ISA.
Where Junior ISAs differ is who owns the investment. Decisions on where to invest contributions are made by the child’s parents, but the money is held in the child’s name. Management of the Junior ISA passes to the child when they reach 16.
The money is locked away until the child reaches 18 and no withdrawals are permitted before this point (except for terminal illness or death). At 18 years, the Junior ISA is rolled into a regular ISA automatically. Once a Junior ISA is opened, anyone can contribute.
What If I Have a Child Trust Fund?
Child Trust Funds, which were available for children born between 1 September 2002 and 2 January 2011, were similar to Junior ISAs. However, due to a lack of competition and the popularity of Junior ISAs, Child Trust Funds often have unreasonably high fees.
The parent that set up the Child Trust Fund can transfer it to a Junior ISA without losing the tax-free status of the money or using up the annual allowance.
If you are thinking of transferring a Child Trust Fund, check the charges you may have to pay first and speak to a financial adviser if you need help.
Your capital is at risk. Investments can fluctuate in value and you may not get back the amount you invest. Past performance is not a guide to future performance. Tax rules can change at any time.
True Potential Investments LLP is authorised and regulated by the Financial Conduct Authority. FRN 527444. www.fca.org.uk Registered in England and Wales as a Limited Liability Partnership No. OC356027.