A Junior ISA (JISA) is a tax-free savings account for children under 18. It works like an adult ISA but with its own separate annual allowance. The child cannot access the money until they turn 18, at which point the account automatically converts into an adult ISA and the funds become theirs. JISAs are a popular way for parents, grandparents, and family members to build a savings pot for a child's future.
Types of Junior ISA
There are two types of Junior ISA, and a child can have one of each:
- Cash Junior ISA: Works like a savings account. The interest rate is fixed or variable, and the capital is secure. Best for shorter time horizons or those who want no risk to the capital.
- Stocks and Shares Junior ISA: Money is invested in funds (typically index funds or managed funds). The value can go up or down, but historically, stock market investments have outperformed cash over long periods. With a potential investment horizon of up to 18 years, this type is often preferred for maximising growth.
Annual Allowance
Junior ISA Allowance 2024/25
£9,000
This is a separate allowance from the adult ISA allowance (£20,000). The £9,000 limit is shared between the Cash JISA and Stocks and Shares JISA — so you could put £4,000 in cash and £5,000 in stocks and shares, for example, but the total cannot exceed £9,000.
Who Can Open and Contribute?
Only a parent or legal guardian can open a Junior ISA. However, anyone can contribute to it — grandparents, aunts, uncles, family friends, or the child themselves. This makes JISAs a practical way for extended family to contribute to a child's future, particularly as an alternative to gifts that might be spent immediately.
The child named on the account is the beneficial owner of the money. The parent or guardian manages the account until the child turns 16 (at which point the child can manage it themselves), but the money cannot be withdrawn by anyone until the child turns 18.
Cash vs Stocks and Shares: The Long-Term Difference
Illustrative Growth Comparison
Saving £9,000 per year for 18 years (£162,000 total contributions):
| Scenario | Assumed Rate | Pot at 18 |
|---|---|---|
| Cash JISA | 2% interest | £193,000 |
| S&S JISA (cautious growth) | 4% annual return | £233,000 |
| S&S JISA (moderate growth) | 6% annual return | £280,000 |
These are illustrative figures only. Investment returns are not guaranteed and the value of investments can go down as well as up. Cash ISA rates vary over time. Figures do not account for inflation.
The long time horizon of a Junior ISA (potentially up to 18 years) means that a Stocks and Shares JISA has historically been more likely to outperform a Cash JISA, because short-term market volatility matters less over longer periods. Many parents opt for low-cost global index funds, which provide broad diversification and typically charge 0.1-0.25% per year.
Grandparents and Family Contributions
JISAs are popular with grandparents who want to contribute to a grandchild's future in a structured, tax-efficient way. Contributions to a JISA also count as gifts for inheritance tax purposes — if the grandparent dies within 7 years, the gifts may form part of their estate. However, regular contributions that come from surplus income (rather than capital) may qualify as exempt transfers under the "normal expenditure out of income" exemption.
Child Trust Fund Transfers
The Child Trust Fund (CTF) was the predecessor to the Junior ISA and was available for children born between 1 September 2002 and 2 January 2011. If your child has a CTF, you can transfer it into a Junior ISA. This is often worthwhile because JISAs typically offer a wider choice of providers and investments, often with lower charges. The transfer does not count towards the JISA annual allowance.
Tax Treatment
Junior ISAs are completely tax-free. Interest, dividends, and capital gains within the JISA are not subject to any tax. Importantly, JISA income does not count towards the parent's income for tax purposes — unlike other savings accounts where money gifted by a parent to a child is taxed as the parent's income if it generates more than £100 per year.
What Happens at 18
On the child's 18th birthday, the Junior ISA automatically converts into an adult ISA. The child — now a legal adult — has full control of the money. They can withdraw it, keep it invested, or continue contributing using their adult ISA allowance. There is no tax charge on the conversion.
It is worth noting that the money belongs to the child and there is no legal mechanism to prevent them from withdrawing it all on their 18th birthday. Some parents have concerns about this, and it is worth having conversations with your child about financial responsibility as they approach 18.
For more on the wider ISA landscape, see our ISA guide. For broader family financial planning, see our guide on financial planning for new parents. You can also use our pension calculator to explore the power of compound growth over long periods.
This guide is for general information only and does not constitute financial advice. The information is based on publicly available data from the FCA, HMRC, and other government sources. Always seek professional advice before making financial decisions. Figures and thresholds are subject to change — check official sources for the latest values.