What’s a Junior ISA?

A Junior ISA (JISA) is a special kind of Individual Savings Account (ISA) available to under 18s, for the child to save themselves or an adult to save on a child’s behalf. It offers the same tax-efficient savings as an adult ISA, but there are a few key differences which we’ll cover in this article.

How does a Junior ISA work?

A Junior ISA can be opened by a parent, family member or legal guardian if the child is under 16, or some providers allow the child to open it by themselves if they’re between 16-18.

Junior ISAs can be either cash ISA or stocks and shares ISAs, as with the adult versions.

The money held in a Junior ISA is managed by the parent or guardian, but the money belongs to the child. They can take control of the account when they’re 16, but can't withdraw the money until they’re 18. However it’s not uncommon for this to work differently with stocks and shares ISAs because of the investing element. The child would take over control when they’re 18, and become responsible for the investing decisions on the account.

You can’t have a Junior ISA as well as a Child Trust Fund, so if you want to open a JISA and you already have a Child Trust Fund, you need to transfer the trust fund into the ISA. If you're not sure if you have a Child Trust Fund, you can find out more here.

What’s the annual ISA allowance for Junior ISAs?

The annual ISA allowance for Junior ISAs is lower than the adult allowance, at £9,000 per year.

How many Junior ISAs can you have?

A child can have two Junior ISAs: one cash and one stocks and shares. The £9,000 limit applies across both ISAs - so even if you have both, £9,000 is the maximum you can contribute each tax year.

Unlike with adult ISAs, it’s two Junior ISAs in total, not two new Junior ISAs each year.

What are the benefits of a Junior ISA?

ISAs are a tax efficient way of saving. Interest earned in a Cash ISA is tax-free and investment returns in a Stocks and Shares ISA are free from capital gains tax (depending on your personal circumstances).

It’s also an additional allowance for adults, on top of their own £20k ISA allowance. But remember that the money belongs to the child once you put it into their ISA and cannot be withdrawn until they’re 18 (though you can transfer it to a different provider on their behalf).

What are the disadvantages of Junior ISAs?

You can pay up to £9,000 a year into a Junior ISA, which is the annual allowance limit. If you want to save more than this, you can put the rest into a regular savings account on your child's behalf.

If you will reach the £9,000 limit you can also consider other ways to invest for your child, like a General Investment Account or Junior SIPP.

This isn't financial advice or personalised to you, and we're not recommending or suggesting you take any particular action. If you're in any doubt about what's right for you, then speak to an authorised financial advisor.

The taxes you pay depend on your circumstances and rules could change in the future.

The value of your investment can go up and down and you could get back less than you put in.

Monzo doesn’t offer Junior ISAs at the moment, but find out more about the saving and investing options we have for adults.