A Junior ISA (or JISA) is a tax-free savings account set up by a parent or guardian for a child below 18 years of age. Anyone can contribute to the account, but only the child can access the money – and only after they turn 18.
Note, that some providers have different rules. For example, at Nutmeg we do not accept JISA applications for children who are over 16 years old.
The account holder pays no tax on interest, capital growth or dividends on any contributions up to the Junior ISA allowance. The child investment account is essentially an amended version of the adult ISA (more on that here), but with a lower limit and different restrictions on withdrawals.
There are two types of JISA:
At Nutmeg, we offer a stocks and shares JISA.
A child can have one cash JISA, one stocks and shares JISA, or both.
With Nutmeg, you may only open one pot per JISA, but a parent or a guardian may open multiple JISAs, albeit only if they relate to different children.
As of the 2022/23 tax year, the annual tax allowance or limit for a JISA is £9,000. For any contributions over and above the limit, the excess is held in a ‘feeder’ savings account in trust for the child until the next tax year and is then automatically to the new tax year’s JISA. Note, the money cannot be returned to whoever contributes.
Your JISA allowance resets at the start of each tax year. The tax year ends on 5th April and your allowance, or any unused portion of it, doesn’t carry over to the next tax year. If you don’t want to lose it, use it.
Tax treatments depend on your individual circumstances and may change in the future.
Unless you are a crown servant abroad, only a parent or legal guardian residing in the UK can open a JISA on behalf of their child.
The parent or guardian who opens the JISA is responsible for managing the account and is known as the ‘registered contact’. In all cases, the person who applies for the JISA will become the first registered contact. To open a Nutmeg JISA, the registered contact must contribute a minimum of £100.
Only the ‘registered contact’ can manage the account, and there can only be one registered contact at any given time. This person must be 18 years or over.
The registered contact is the only person who can:
For a Nutmeg Junior ISA, anyone, including parents, friends and family, can contribute on behalf of the child, provided total contributions don't exceed the JISA limit.
Those who live outside of the UK can only become a registered contact if they are a crown servant (in the UK’s armed forces, diplomatic service or overseas civil service) and the child depends on them for care. Both criteria must apply.
The role of registered contact can be passed to another person with parental responsibility. However, registered contact status can usually only be given on agreement with the existing registered contact.
There are exceptions where the prior consent of the existing contact is not needed:
The money in a JISA belongs to the child in all but exceptional circumstances. Please see the HMRC website for more details.
Once the child becomes 18 years old the Junior ISA is converted into a normal stocks and shares ISA in their name.
Anyone, including parents, friends and family, can contribute on behalf of the child, provided total contributions don't exceed the JISA limit.
Any contributions to a JISA are not factored into your annual ISA allowance.
A registered contact may transfer either a JISA or Child Trust Fund from another provider to Nutmeg. Partial CTF or JISA transfers are not allowed.
The child can access the money after they turn 18. Once the child becomes 18 years old the Junior ISA is converted into a normal stocks and shares ISA in their name.
You cannot have a JISA as well as a Child Trust Fund (CTF). If you want to open a JISA you must transfer the CTF in.
A Child Trust Fund is a long-term tax-free savings account for children. The CTF scheme is now closed, so you cannot apply for a new one. But people with existing CTFs can continue to contribute £9,000 a year into them.
If your child is terminally ill, you can apply to HMRC to release the funds in the JISA.
If your child dies, any money in the JISA will be paid to whoever inherits their estate.
The information to be supplied is described in more detail by HMRC.
As with all investing, your capital is at risk. The value of your Junior ISA can go down as well as up and you may get back less than you invest. To open a Nutmeg JISA, your child must be under the age of 16 and funds cannot be withdrawn until your child turns 18. Tax treatments apply and may be subject to change in the future. If you are unsure if a Junior ISA is the right choice for you and your child, please seek financial advice.