From driving lessons to their first home, having a nest egg for your little ones is the perfect gift.
With Newcastle Building Society (Cash Junior ISA) and Newcastle Financial Advisers (advice provided on a Stocks and Shares Junior ISA), you can save for your child’s future in a tax-efficient way.
Planning your financial future can be complicated, so Tom Parkin from Newcastle Financial Advisers Limited answers frequently asked questions about Junior ISAs.
Introduced in 2011, Junior ISAs (JISAS) are savings accounts available to any child not eligible for a Child Trust Fund.
You can set up a Junior ISA on behalf of your child and they will have access to it once they turn 18.
With a Junior ISA, all interest earned is tax-free. Meaning the money will grow just as quickly as your little one.
To be eligible for a Junior ISA, your child should:
- Be aged under 18
- Live in the UK
There are many reasons you may be considering a Junior ISA over other savings alternatives:
- Easy and inexpensive to open
- A tax-efficient way to save
- Anyone can make payments into a Junior ISA
- The savings are locked until your child’s 18th birthday, so can’t be dipped into unnecessarily
- You can easily transfer your Junior ISA across from other Junior ISA providers
There are two types of Junior ISA:
A Junior Cash ISA is very similar to a standard savings account, however you don’t have to pay UK Income Tax on the interest the money earns.
Stock and shares ISA
Junior investment ISAs have the potential to earn a high rate of returns, as the money is invested in the stock market. You also don’t have to pay UK Income Tax or Capital Gains Tax on any of the returns.
Your child can have one or both types of Junior ISA, however the money saved into both accounts will count towards the same Junior ISA allowance.
Anyone can make a payment into a Junior ISA, up to the yearly allowance. However, though money in the account belongs to your child, neither you or your child can withdraw from it until your child has turned 18.
Nonetheless, your little one can still manage their Junior ISA from the age of 16.
The Junior ISA allowance dictates that in the 2023/24 tax year, you can save or invest up to £9,000 in a Junior ISA.
This money can be split between the two different types of Junior ISA or just the one, depending on your personal preference. For example, you may want to stow half of the money in a stocks and shares ISA and half in a cash ISA. Both accounts count towards your single £9,000 Junior ISA allowance.
Once your child turns 18, the account will automatically convert into a normal adult ISA and, as such, your child will be able to benefit from the full annual allowance for adults, which is £20,000 for the 2023/2024 tax year.
When it comes to a flexible stocks and shares ISA, it’s best to speak to your financial adviser to discuss what you might want to do next.
As a parent or legal guardian, you can open a Junior ISA on your child’s behalf.
If you’re interested in opening a Junior ISA, you must be a resident in the UK and have parental responsibility for that child.
With Newcastle Building Society, you can set up a Junior ISA with an initial deposit of as little as £1. Book an appointment at your nearest branch and we’ll be happy to explain more.
Need some help?
A stocks and shares ISA is a medium to long term investment, which aims to increase the value of the money you invest for growth or income or both. The value of your investments and any income from them can fall as well as rise. You may not get back the amount you invested.
HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.
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Newcastle Building Society introduces to Newcastle Financial Advisers Limited for advice on Investments, Pensions, Life and Protection Insurance and Inheritance Tax Planning. Newcastle Financial Advisers Limited is an appointed representative of The Openwork Partnership which is a trading style of Openwork Limited which is authorised and regulated by the Financial Conduct Authority.
NEWCASTLE BUILDING SOCIETY INTRODUCES TO NEWCASTLE FINANCIAL ADVISERS LIMITED FOR ADVICE ON INVESTMENTS, PENSIONS, LIFE AND PROTECTION INSURANCE AND INHERITANCE TAX PLANNING.
Approved by the Openwork Partnership on 17.07.2023.