Junior ISA’s

| November 22, 2011

Starting 1/11/2011 with an annual limit of £3,600 Children below the age of 18 can now also  invest into the tax efficient ISA (Individual Savings Account) and they can manage the account from the age of 16.

Grandparents can help their grandchildren and help save on potential IHT by utilising their annual allowances very tax efficiently by gifting £3,000 to the grandchild each year.

Junior ISA’s are expected to quickly become a popular way for family and friends to build up tax-efficient savings and investments to help with the cost of university, provide a deposit for a house or simply give children a great start in life.

Junior ISA features

  • Allowance of £3,600 per child per tax year

The annual allowance will rise in line with inflation from 2013.

  • Account held in child’s name

A parent or guardian can open and manage the child’s Junior ISA.

  • Anyone can contribute to a child’s Junior ISA

Once a parent or guardian open a Junior ISA for their child anyone, friend or family, is able to make a contribution up to the annual limit.

  • No withdrawals permitted until age 18

When the child reaches 18 their account is automatically converted into an ‘adult’ ISA and they are entitled to full access to their investments and savings.

  • Same tax benefits as an adult ISA

No capital gains tax and no further tax on any income. Interest on cash held in a Junior ISA is paid gross. Please remember the value of tax savings depends on the child’s circumstances and tax rules can change over time.

  • Cash or Stocks & Shares

Like adult ISA’s, there are two types of Junior ISA; Cash or Stocks & Shares. Children will only be able to hold one Cash Junior ISA and one Stocks & Shares Junior ISA at any time.

Who is eligible for a Junior ISA?

Any child resident in the UK who wasn’t eligible for a Child Trust Fund (CTF):

  • Children born on or after 3 January 2011
  • Children (aged under 18) born on or before 31 August 2002
  • Children born on or between 1 September 2002 and 2 January 2011 who didn’t qualify for a Child Trust Fund. Note that most children born between these dates did qualify for a CTF.

Contact ourselves at Bentley Brown (IFA) on 0800 848 8908 for a FREE consultation

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Category: General, Investments

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