What is a Junior ISA? A complete guide for parents

A Junior ISA (or JISA) is a long-term savings or investment plan that parents or legal guardians can open to invest in a child’s future. If you open a Junior ISA for your child, they will receive a tax-free lump sum once they’ve turned 18 years old. Any returns earned will be free from Income Tax or Capital Gains Tax.

If you’re thinking of opening a Junior ISA for a child you love, this guide has all the information you need to know before getting started.

Want to know more about Shepherds Friendly’s investment plan for children? You can learn all about our Junior ISA in this video:

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A Junior ISA (or a JISA) is a tax-efficient individual savings account made for children, which allows you to invest towards a cash lump sum for your child. As you won’t be taxed on any returns on the money you invest, you can give your child the ultimate tax-free cash gift when they turn 18 years old.

A parent or guardian can set up a Junior ISA and invest towards their child’s future firsts, whether it’s their first car, a housing deposit, or university education. In addition, once you’ve opened a plan, you can manage all of your child’s money online, such as topping up or adjusting how much you want to invest. Friends and family can pay in too, making a Junior ISA an ideal way for relatives to gift money to your child.

From just £10 a month, or with a one-off payment from £100, you can open a plan for your child and start saving for their future. The Junior ISA savings limit is decided by the UK government, and you can invest up to this amount each new tax year.

With our Junior ISA, your money is invested into a With-Profits fund. This is a ready-made fund made up of a variety of assets, which are actively managed by fund managers who monitor the market and aim to ensure your money is protected from market volatility and your child gets the most out their Junior ISA.

We aim to pay returns on your child’s savings in the form of bonuses paid directly into their plan. As our main aim is to pay bonuses consistently in the longer term, when the market has performed well, we may hold back some of the returns gained so we can still aim to pay bonuses when the market performs badly.

The effect of this is known as “smoothing” which aims to provide a smoother overall investment journey where the daily ups and downs in the market are levelled out.

In fact, since the launch of our Junior ISA in 2011, we’ve been able to pay bonuses consistently, and we continue to be trusted by parents to grow their children’s investment in the long term.

As with any investment, the value of the investment in your child’s Junior ISA can rise and fall, depending on market conditions; however, our Premium Guarantee means that, if you remain invested with us until your child turns 18 (and no longer than 3 months after), you are guaranteed to receive all of the money you’ve paid into the plan, plus any bonuses.

You can relax knowing that every single penny will go back to your child and help towards their future.

How does a Junior ISA work?

As a Junior ISA is a long-term savings or investment plan, it is designed for you to make one-off payments, or regular payments as your child grows, and aims to offer interest or potential investment growth.

Each tax year, the annual Junior ISA allowance is set by the Government. This is the maximum limit that you can save or invest tax-efficiently into a Junior ISA each tax year (which runs from 6th April to 5th April). If you have more than one child, each child will have their own separate allowance. See the latest Junior ISA allowance.

To be eligible to open a Junior ISA, you need to be:

• Aged 16 or older.
• A resident of the United Kingdom (excluding the Isle of Man and Channel Islands).
• The child’s parent or legal guardian. If you’d like to open a Junior ISA for yourself, you must be at least 16 years old but under 18.

A parent or legal guardian has control over managing the child’s account while they are under 16. However, once the child is aged 16 years old, they have the option to take control of the account, should they wish to. Any money saved or invested into a Junior ISA belongs to the child and only they can access it when they are 18.

Who can have a Junior ISA?

As a parent or legal guardian, you can open a Junior ISA for your child if the child is under 18 and lives in the United Kingdom.

If your child was born between 2002 and 2011 they may already have a Child Trust Fund (CTF) set up in their name. CTFs can be transferred into a Junior ISA. You can find out if your child has a CTF on Gov.uk.

Who can contribute to a Junior ISA?

While only a parent or legal guardian can open a Junior ISA on behalf of a child, family and friends are able to contribute into the plan alongside them to help the child’s fund grow. For example, grandparents or godparents can make contributions on your child’s birthday.

If you open a Junior ISA with Shepherds Friendly, contributions can be made either via Direct Debit or lump sum, with payments starting from just £10 a month. If a child in your life has a Junior ISA with us and you’d like to make a contribution to their nest egg, please call our Member Services team on 0800 526 249.

The amount you choose to invest for a child is entirely up to you, however it cannot be more than their annual Junior ISA allowance (£9,000).

What are the benefits of a Junior ISA?

If you’re wondering “Are Junior ISAs worth it?”, a Junior ISA can make a real difference for both you and your child.

A Junior ISA has a whole host of benefits for your child. The main one being the tax-free lump sum they’ll get at 18, which could help them kickstart their adult life. From university fees, to driving lessons or even putting down a deposit on a house; the money you put aside for them could give them a great head start. Opening a Junior ISA and letting your child be involved is also a great way to start teaching money skills from a young age.

There are benefits for parents and guardians, too. Opening a Junior ISA can help you spread the cost of giving your child a financial helping hand in the future. So, when the time comes, you can be confident knowing you can contribute towards their major milestones without having to find the cash or dip into your own savings. A Junior ISA can also help to make the money you put aside go even further; any growth or interest earned is more money you can gift your child when they turn 18.

Here’s how our Junior ISA could help you and your child get ready for their future:

Benefit of Junior ISA	Why it’s great
Tax-free growth	All returns earned through a Junior ISA are free from Income Tax and Capital Gains Tax, which could help your child’s savings grow and put more in their pocket at 18.
Long-term approach	The funds can only be accessed when your child turns 18. This encourages consistent money habits and helps you build a meaningful lump sum for their future as they grow.
Family-friendly contributions	Parents, grandparents, and friends can all contribute, making it a great way for loved ones to give money towards your child’s milestone moments (up to the £9,000 annual allowance).
Professionally managed investment	Your money is invested in our With-Profits Fund, managed by experienced fund managers with the aim of delivering steady, smoothed returns over the long-term.
Premium Guarantee	We guarantee that if you stay invested until your child’s 18th birthday (and no longer than 3 months after), they’ll receive 100% of the money you’ve paid in, plus any bonuses earned over the lifetime of the plan.
Simple to manage online	Once opened, your child’s Junior ISA can be managed entirely online, letting you set up regular payments, make top-ups, and monitor your child’s investment easily.

Which types of Junior ISAs are available in the UK?

There are two types of Junior ISA available in the UK:

Type of Junior ISA	How it works
Junior Cash ISA	Works like a children’s savings account, but the interest your child earns is tax-free, and you don’t pay any tax on it either. The value of the account won’t go down, but returns depend on the interest rate offered by your provider.
Junior Stocks and Shares ISA	This is a tax-efficient investment account where money is invested in funds or assets with the potential for higher returns over the long-term. Like with a Cash ISA, any income or growth earned within the plan is exempt from UK Income Tax and Capital Gains Tax. However, the value of investments can go down as well as up.

At Shepherds Friendly, we offer a Stocks and Shares Junior ISA.

How safe is a Junior Stocks and Shares ISA?

With any kind of investment, your capital is at risk and the value of your investment can go down as well as up. However, with a little research, you can find a Junior ISA that suits the level of risk you’re happy to take.

Our Junior ISA is classed as a medium-to-low risk investment and invests your child’s money in our With-Profits Fund. This fund is actively managed with the aim of providing steady, long-term growth through a mix of assets, whilst aiming to protect your child’s investment from short-term market changes. We’ve paid bonuses ever since the plan was launched in 2011 and our Premium Guarantee means you can invest with confidence.

How many Junior ISAs can you have?

Your child can have one of each type of Junior ISA one Cash and one Stocks & Shares but the total amount invested across both must not exceed the annual Junior ISA allowance of £9,000 (for the 2025/26 tax year). For example, you can invest £6,000 in a Stocks and Shares Junior ISA and £3,000 in a Cash Junior ISA tax-efficiently.

What happens to a Junior ISA at 18?

When your child turns 18 years old and their plan reaches maturity, they will have access to the money you have put aside for them.

If your child has a Shepherds Friendly Junior ISA, we will send them the information they will need to withdraw the funds. They will also be given the option to continue investing with us in an adult ISA. Many members choose to transfer their Junior ISA into our Investment ISA, so their savings can continue to grow tax-efficiently.

How to set up a Junior ISA

A Shepherds Friendly Junior ISA can be opened online in a matter of minutes, or you can also apply over the phone.

The online application form will ask you to enter your personal details and how much you wish to invest for your child, starting from just £10 a month. Once you’ve completed the form, you will receive a confirmation email containing all of the important information regarding your child’s Junior ISA and how to access the account online.

Be sure to read through our Important Information Guide for all the key information about our Junior ISA. Remember that when you invest, your capital is at risk.