Junior Individual Savings Account (JISA)

What is a Junior ISA?

Launched on 1st November 2011, a Junior ISA works in a very similar way to its adult equivalent, but they are exclusively available to people under the age of 18. It is a tax-efficient savings vehicle that offers parents, grandparents and anyone else a way of contributing to a child’s investment. Please note however, it is only the parent or guardian that can open the account.

What are the various types of Junior ISA?

There are two different types of Junior ISA; a Junior Cash ISA and a Junior Stocks and Shares ISA. A child can only hold one Junior Cash ISA and one Junior Stocks and Shares ISA at any one time.

Who qualifies for a Junior ISA?

Most children are eligible as long as they:

Do not currently have a Child Trust Fund in their name
Are a UK resident
Born on or after 3rd January 2011 or are under 18 years of age and born before September 2002

Can I switch between the various types of Junior ISA?

Yes you can, you are free to transfer your JISA from a Cash JISA to a Stocks and Shares JISA and vice versa. This is unlike the adult version which does not allow you to transfer from Stocks & Shares to a Cash ISA.

What if I have a Child Trust Fund (CTF)?

The Tax Free Junior ISA was created to replace the Child Trust Fund and if your child currently has a trust fund in place then you will not be able to open a Junior ISA in their name as well. Whilst it is not possible to open a new Child Trust Fund, if you have one you can still keep it going and pay money into it but the Government will no longer be contributing as previously planned. The annual contribution limit of a Child Trust Fund has been increased to £3600 per year in line with the new Junior ISA.

Why should I open a Junior ISA for my child?

A simple way to save for a child’s future
Anyone can pay into the account once it has been set up
Invest up to £3600 tax free for financial year 2011/2012
You can hold either a cash or equity ISA or both
Save up to £198 with our discounts on more than 1,500 funds from all the major investment houses.
Profits free from income tax and capital gains tax

Can I withdraw funds from a Junior ISA?

Withdrawals can only be made when the account holder becomes age 18, except in cases of terminal illness or death. Other than these circumstances, the capital within a JISA cannot be withdrawn and income cannot be paid out. Once the child turns 18, the investments held in a JISA will automatically be transferred and held in a tax free ISA wrapper, pending the former child's instructions on what he or she wishes to happen to it.

For your consideration

The best time to start investing is now
Investing for children is all about the long term, so to give your investment as much time as possible to grow, you need to start investing as soon as possible. The sooner you invest the more time your money will have to grow. You will also benefit more from “compounding”, which is the snowball effect you have when the growth your investment has achieved also starts to grow. If you delay, you’ll probably have to invest much more to achieve a similar result.

Invest as much as you can afford
Many people find it hard to work out how much money they will need to save to help their children. This is why we believe the best strategy is to put aside as much as you can afford. It means you are not just more likely to achieve your goal but you could build up more than you need.

Think about saving each month
Unless you have a large sum to invest, a good way to build up significant savings for your children over the years is to start a monthly savings plan. This can help you maintain a long-term investment strategy and it is a useful way of being disciplined about saving for your children’s future – you will soon start thinking of your regular payment as an essential part of your budget. Monthly investments also give you a way to benefit no matter how the markets are performing. If share prices go up, the shares you already own will increase in value. On the other hand, if share prices go down, your next investment will buy more shares. This benefit of regular saving is a phenomenon known as “pound cost averaging”.

How can I buy?

As this product is relatively new, there is no online facility available at the moment. This is presently being developed and we would hope to have this available in the early part of 2012. In the meantime, feel free to download the paper application and read the Cofunds JISA Terms & Conditions here:

Completed applications should be returned to:
Willis Owen Limited, PO Box 402, Hull, HU9 9AF.