Tax, investments and pension rules can change over time so the information below may not be current. This article was correct at the time of publishing.

How a Junior ISA can help your child reach their financial goals

It is becoming increasingly common for children to have to go to ‘The Bank of Mum and Dad’ for financial help to achieve life goals such as buying a house or attending university. The average house deposit put down by a first-time buyer in 2020 was over £57,0001.

Benefits of a Junior ISA

Many parents or grandparents might think that opening a bank account for their child/grandchild is a good way to set money aside for their future. However, a Junior ISA should be the first consideration when saving for a child because it is more tax efficient.

Any investment growth is free from Income or Capital Gains Tax in a Junior ISA so it is a good way for parents to help children to achieve their long-term goals.

A Junior ISA must be opened and managed by a parent, however once it is open anyone can contribute to it such as grandparents or other family members.

The maximum that can be saved into a Junior ISA each tax year is currently £9,000.

All assets in a Junior ISA are locked away until the child is 18, however they can manage their own account from the age of 16 if it is a Cash version so it can be used as a way to educate children on the importance of saving and investing for their future.

A Junior ISA can be opened with a lump sum or with regular contributions which gives you flexibility to fit the Junior ISA in with any other gifting arrangements you may have made. At Four Wealth Management, we offer a Junior Stocks and Shares ISA. The money can then be invested in a portfolio that your financial adviser has determined as suitable for your child’s goals.

Book a no-obligation meeting to discuss opening a Junior ISA

Speak to a Financial Advisor

Junior Stocks & Shares ISA vs Junior Cash ISA

A Junior Stocks and Shares ISA has the potential to provide your child with a much bigger financial head start than a Junior Cash ISA. Over £3.2 billion of Junior ISA funds are sitting in Junior Cash ISAs2. Many parents think of a Junior Cash ISA as an easy way to save for their child’s future with no risk. However, the reality is that interest rates are at new lows meaning that Cash savings are generating negative returns in real terms when taking into account record high inflation rates of 9% in 20223.

Making an early start with a Junior Stocks and Shares ISA means that money could be invested tax-efficiently for 18 years (or even longer if your child chooses to keep the money invested). A long-term period creates a good opportunity to accumulate wealth. Your financial adviser at Four Wealth Management will recommend which investments are most suitable for your child’s Junior ISA. Your financial adviser will review the ISA annually and make any necessary changes to the underlying investments to help keep your child’s ISA on track to help them meet their goals.

Start a Junior ISA today

Book a no-obligation meeting to discuss saving and investment options for your children or grandchildren.

The meeting can be at your home address, at one of our offices or on zoom. Book online now or call us on 0117 973 0500.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

An investment in a Junior Stocks and Shares ISA will not provide the same security of capital associated with a Junior Cash ISA.

The favourable tax treatment of Junior ISAs may be subject to changes in legislation in the future.

The levels and bases of taxation, and reliefs from taxation, can change at any time and are dependent on individual circumstances.

1 Halifax, January 2021
2 HMRC, Individual Savings Account (ISA) Statistics, April 2021
2 ONS, ‘Consumer price inflation, UK: April 2022’, April 2022

Enquire Now

If you have any queries or would like to arrange a face to face meeting with an adviser for a no obligation review of your personal finances, simply book a call back using the form below. Alternatively, you can call us on 0117 973 0500.

The Partner together with St. James's Place Wealth Management plc are the data controllers of any personal data you provide to us. For further information on our uses of your personal data, please see the Partner's Privacy Policy or the St. James's Place Privacy Policy.

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How a Junior ISA can help your child reach their financial goals
FourWealth Management