Junior ISA

A Junior ISA (Individual Savings Account) is a savings account designed for children who are under the age of 18 and who are UK residents. It is a tax-free savings account that can be opened by parents or guardians on behalf of their child, with the aim of building up savings for their future.


Annual limit

The annual limit for contributions to a Junior ISA is set by the UK government and may change from year to year. For the tax year 2023/24, the annual limit is £9,000. This means that parents, grandparents, or other family members can contribute up to £9,000 per year to a child’s Junior ISA.

It’s important to note that any contributions made to a Junior ISA count towards the annual ISA limit of the contributor. This means that if the contributor has already contributed the maximum amount to their own ISA, they may not be able to contribute to a Junior ISA.

How many junior ISAs?

Unlike ISAs, children can only have one Cash Junior ISA and one Stocks and Shares Junior ISA at any given time. However, parents, guardians, and other family members can contribute to the same child’s Junior ISA account.

It’s worth noting that a child with a Child Trust Fund (CTF), which was the predecessor to Junior ISAs, is also eligible to have a Junior ISA. However, the child can only hold one of either a CTF or a Junior ISA, not both. In this case, it may be beneficial to transfer the CTF into a Junior ISA to take advantage of the tax-free savings benefits of a Junior ISA.

Additionally, if a child has a Junior ISA and they become a resident of another country, they may be able to keep the account open, but they will not be able to make any further contributions to it.

How much money can I invest on behalf of my child?

As a parent or guardian, you can contribute up to the annual limit set by the UK government to your child’s Junior ISA. For the tax year 2023/24, the annual limit is £9,000.

If you invested the maximum amount into to your child’s Junior ISA, you may also choose to invest through a standard investment account. There are no limits on the amount you invest if it is not through an ISA.

Junior SIPP

Another investment option is the Junior SIPP.  A Junior Self-Invested Personal Pension (SIPP) is a type of personal pension that is designed for children who are under the age of 18 and who are UK residents.

Similar to a regular SIPP, a Junior SIPP allows parents, guardians, or other family members to contribute to a pension fund on behalf of a child. The child can’t access the money in the pension fund until they reach the age of 55, which is the same as for a regular SIPP.

The money invested in a Junior SIPP is tax-free, and contributions made to the pension fund may qualify for tax relief. However, it’s important to note that the child’s annual contribution limit is currently set at £3,600 per tax year, which includes any contributions made by parents, guardians, or other family members.

A Junior SIPP can be a good option for parents who want to start saving for their child’s retirement early as they will benefit from ‘time in market’. This means that investors who stay invested in the stock market over a long period of time are more likely to see positive returns, even if there are short-term dips or downturns along the way.

This is because the stock market has historically trended upwards over the long term, and by staying invested, investors have the potential to benefit from these long-term trends. Investments in Junior ISAs and SIPPs are a case in point.