What is a Junior ISA?

A Junior ISA (JISA) is a long-term savings or investment plan that can be opened by a parent or legal guardian to invest in their child’s future, allowing their child to receive a tax-free lump sum once they’ve turned 18 years old. This also allows you to save for their future without paying income tax or Capital Gains tax on any returns.

Discover more about our Junior ISA in this video:

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 over many years whilst receiving interest or potential investment growth.

Each year you have an annual Junior ISA allowance that is set by the Government, which is the limit that you can save or invest tax-efficiently into a Junior ISA each tax year. In the 2022/23 tax year the annual Junior ISA allowance is £9,000.

To be eligible to open a Junior ISA you must be:

• Aged 16+ 
• A resident of the United Kingdom (excluding the Isle of Man and Channel Islands)
• The child’s parent or legal guardian OR the account holder (if you’re aged 16-17)

A parent or legal guardian has control over the child’s account while they are under 16, however once the child is aged 16-17 they have the option to take control of the account should they wish to.

Who can contribute to a Junior ISA?

While only a parent or legal guardian can open a Junior ISA, family and friends are able to contribute into the plan alongside them to help the child’s fund grow. Contributions can be made either via Direct Debit or lump sum and payments can be made from just £10 a month into the Shepherds Friendly Junior ISA. To contribute to the Junior ISA of  a child you know, call the Shepherds Friendly member services team at 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 as of 2022/23).

How many Junior ISAs can you have?

There are two types of Junior ISA:

• Cash Junior ISA
• Stocks and shares Junior ISA

You can invest in one of each type of Junior ISA every tax year, a stocks and shares Junior ISA and a cash Junior ISA. With a stocks and shares Junior ISA you will pay no income tax or Capital Gains tax on any potential investment returns. Whereas for a cash Junior ISA, you pay no tax on interest on the cash you save.

While you can add money into both types of Junior ISA, the total amount across both will count towards your annual Junior ISA allowance. E.g. 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, 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.

How to set up a Junior ISA?

A Shepherds Friendly Junior ISA can be opened online, or over the phone in as little as 10 minutes.

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 Guides for all the key information about our Junior ISA. Remember that when you invest, your capital is at risk.