These current circumstances will have many families focused upon the immediate future, the next few months, how to adjust to homeschooling and spending significantly more time together. However, life must go on and although our futures may be different, saving for our children’s futures are still a high priority. Junior ISAs provide an excellent way to invest in their future, and the doubling of the tax-free annual allowance allows those who can to contribute more than ever before.
It is a tax-free savings account which is only available for children below the age of 18.
There are two types:
Each eligible child can only have one cash and one stocks and shares Junior ISA.
Before the recent changes, £4,368 could be paid into a Junior ISA in the 2019 to 2020 tax year. However, following the 2020 Budget, the allowance has more than doubled.
In the 2020 to 2021 tax year, up to £9,000 can be paid into a Junior ISA.
Up to the maximum Junior ISA allowance, which is £9,000 in the 2020/21 tax year.
The allowance resets every tax year and you can add a new allowance to your Junior ISA each tax year until your child turns 18.
If you open a cash Junior ISA and a stocks and shares Junior ISA you have to make sure you do not collectively exceed the Junior ISA allowance each tax year, as the allowance is shared over both types.
This depends on the age of your child:
If you open a cash Junior ISA on behalf of your child it will automatically switch into their name when they turn 16, but they will not be able to access the money until they turn 18.
If you wish to top up or open up a Junior ISA or would like to speak to someone about your other investments, we’re here to help you. You can either phone us directly or click below to book a meeting with one of our professional advisers.
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