Call Richard Cook: 07770 575 122

email: richard@theinvestmentandretirementcoach.co.uk

Junior ISAs gaining in popularity

Are your children/grandchildren missing out? There are very good reasons why almost 15% more plans were subscribed to in 2017/2018 than the previous year.

With interest rates remaining low the traditional way of opening a Building Society account to save for a child is unlikely to produce anything like the returns available from an ISA invested in funds linked to the stock-market.

Given the likely timescales of most Junior ISAs the natural volatility of stock-market investments is not something to be concerned about and, if you are contributing monthly, can be very beneficial. I favour a small range of Index Tracker funds to keep costs low and provide a good level of diversification.

A Junior ISA can be set up by the person with parental responsibility for a child under 18. However, anyone can pay into the account – parents, grandparents, godparents, aunts, uncles etc – up to £4,368 in 2019/20.

Just be aware that a child can only have one Cash ISA and one Stocks and Shares ISA, so if the parent wants to change ISA manager the whole of the existing ISA needs to be transferred.

All of the income and growth is entirely tax free unlike other investments funded by the parent where, subject to a £100 per annum de minimis, all income is taxed as if it was the parents’ income.

Grandparents often choose to to fund  Junior ISAs for their grandchildren by way of their £3,000 annual IHT free gift allowance. Beyond that, regular payments from surplus income are also exempt from IHT.

As my regular readers will know, I am not a regulated financial adviser and I can only provide general guidance as distinct from personal advice. This is however one of those situations where one of the user friendly, low cost, online services could provide all you with everything you need without going to an adviser. Have a look at Hargreaves Lansdown.

If having read their guide you still need some help, give me, Richard, a ring on 07770 575122 and I can help you decide whether you need to talk to an adviser or whether my guidance service will do the job.

Don’t let your kids miss out. The rise of Junior ISAs shows no sign of abating and its position as a key part of wealth planning for different generations looks assured.

One word of warning. Some parents worry that their child will just blow the whole fund on their 18th birthday. That rarely happens, but if you were a wild child and see history repeating itself there are other ways of saving which will not be as tax effective but will leave you in control. Just phone or text me and I can let you have more information.


This document and our on going services are not personal advice. We'll give you all the help and guidance you need to make your investment and retirement decisions, but we can't advise you. If you're not sure whether you need regulated financial advice we can put you in touch with a suitably qualified and experienced regulated adviser. Because we are not regulated by the Financial Conduct Authority you will not have access to the Financial Ombudsman Service in respect of any complaints. If you use one of the "no advice" on line services to handle investment transactions they will be Regulated and you will have access to the Ombudsman and The Financial Compensation Scheme in respect of their services. The value of investments/pension plans can fall or rise depending on market performance. The Retirement Team and The Investment and Retirement Coach are trading names of Capture Success Ltd Reg No 01825075 Tel 07770575122

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