Junior Isa – Understanding How You Could Benefit

By Author: George Pardew
Total Articles: 5
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If you want to help your children or grandchildren achieve their dreams, a Junior ISA could be a good way to make the most of your investment. It’s likely that you need to do some research prior to making an investment. Our survey indicates the majority (90%) of the UK population don’t understand the new Junior ISA rules.

Recent research conducted amongst 2,000 individuals in the UK uncovered some interesting findings regarding the introduction of the new Junior ISA. Results revealed that 41% of children will miss out on the opportunities that a Junior ISA will bring. This could be down to many reasons, one of which could be that a surprising 90% of individuals don’t know what the Junior ISA limit is. While the £ 3,600 allowance for Junior ISAs did change in the summer, it has been well publicised in the press over the passed few months.

Some respondents appeared to be looking at their entire family’s tax planning including their children – 35% told us planning that they plan to use their own ISA allowance before investing in a Junior ISA for a family member. There may be a number of reasons ...
... behind this, one of which is 70% parents indicated that they believe that it should not be up to the child on how to spend their money before the age of 18.

Education, Education, Education,

There is good news for university education plans with 39% of individuals citing this as their reason to invest. This is prudent planning in deed. Their university pot could build up to be a healthy sum, as 77% of those investing in a Junior ISA plan to do so every year.

Great tax advantages

A Junior Individual Savings Account (Junior ISA) offers all the tax benefits of a standard ISA, so your children won’t have to pay income tax or capital gains tax on their investment returns. In fact, Junior ISAs won’t need to be declared on your tax return or theirs. Please note, Junior ISAs are not available to children who already have a Child Trust Fund.

Control and access

You can open Junior ISAs for your children if you are their parent or guardian. Your friends and family are then free to make their own contributions into the account. It’s up to you to choose where all the money is invested, but the child is the beneficial owner of the Junior ISA. Tax savings and eligibility to invest in a Junior ISA will depend on personal circumstances. All tax rules may change in future.

Making the most of the Junior ISA Allowance)

There are two ways to invest. You can put aside lump sums (with a minimum investment of £ 500) or make regular payments (which can start at £50 a month). Just remember that the total investment this tax year cannot exceed £ 3,600. The value of investments can fall as well as rise, so your children may get back less than you invest.

Limited access to funds

Your children won’t have access to the savings until they reach the age of 18. At this point, their Junior ISAs will become standard adult ISA accounts held in their names. They can use the money straight away, if they need to, or they can choose to keep it invested to help them with life’s expenses when they are older.

About the author: George Pardew is a writer and supports junior ISA accounts.