Research by SavvyWoman showed almost half of parents wrongly assume all children can have a junior ISA and many aren’t sure if there are any limits on what can be paid into one.
What our research found: who can have a junior ISA
We commissioned Opinium Research, which surveyed 2001 adults, including 1,357 parents, about the rules on who could have a junior ISA. The findings are:
- 49% of parents wrongly think all children are allowed a junior ISA (50% of men and 48% of women);
- 14% of parents correctly think that only ‘children who meet certain requirements’ are allowed a junior ISA (14% of men and 15% of women);
- 37% of parents don’t know or aren’t sure whether all children or only certain children are allowed a junior ISA (36% of men and 37% of women);
- Older parents are less likely to give the wrong answer: 45% of parents aged 55+ wrongly say that all children are allowed a junior ISA, compared to 52% of parents aged 35-54 and 53% of parents aged 18-34;
What the rules say: The rules say that only children who didn’t qualify for a Child Trust Fund are able to take out a junior ISA. Children who were born between 1st September 2002 and 2nd January 2011 and who lived in the UK, were eligible for a child trust fund. If your child doesn’t fall into that category and they live in the UK, they’ll be able to have a junior ISA.
What our research found: how much can be paid into a junior ISA
The research also asked parents whether they thought there are any limits on how much money they can pay into a junior ISA each year. The findings are:
- Just over one in ten parents (11%) think there are no limits on how much they can pay into a junior ISA (11% of men and 12% of women);
- Over half (55%) correctly think there are limits on how much they can pay in (59% of men and 52% of women);
- A third of parents (33%) don’t know or aren’t sure (30% of men and 36% of women);
- Parents of children aged 14-15 are most likely to know that there are limits on how much they can pay into a junior ISA (65%), while parents with children aged 4-6 are least likely to know there are limits (51%);
What the rules say: The rules say that you can pay in a fixed amount to a junior ISA each year. It’s up to £4,368 a year (in total) into a junior ISA in the tax year 2019-20. This figure normally increases every year. Unusually, when your child is aged 16 or 17, they can also take out a cash adult ISA.
Junior ISA basics
Junior ISAs work in a similar way to adult ISAs in that interest on cash is paid tax-free and there’s no tax to pay on stocks and shares junior ISAs when cashed in. At the moment, junior ISAs can be transferred between providers to get a better return, however unlike adult ISAs money cannot be withdrawn from junior ISAs until the child is 18 and children can’t take out a new one every year.
SavvyWoman’s Guide to Junior ISA Basics:
- A junior ISA has to be opened by a parent or guardian on behalf of their child but once the child reaches 16 they can decide where their junior ISA money is saved or invested.
- Parents or guardians, family and friends can pay into a junior ISA every year, up to an overall limit. The junior ISA limit is £4,368 in the tax year 2019-20 but it changes every year.
- Children can have one cash and one stocks and shares junior ISA.
- Money cannot be withdrawn before the child is 18 when the junior ISA matures and it is theirs to manage. It’s automatically rolled over into an adult ISA unless the child withdraws the money.
- Children cannot have a junior ISA if they already have a child trust fund and currently a child trust fund can’t be transferred into a junior ISA, although this is due to change in April 2015.
- Not all junior ISA accounts accept money transferred from another junior ISA.
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