To ensure a secure future for your children, it is certainly important to accompany and support them as they grow up, offering them the best educational opportunities and helping them make choices that are in line with their talents and personalities. However, it is equally important to guarantee them a certain level of financial security. To do this, you can use tax-efficient savings or investment solutions that allow you to set aside and grow capital until your children reach adulthood.
Among the solutions available are savings accounts and Junior ISA investment options, which are tax-free up to £9,000 per year and perfect for allowing other relatives to contribute to building financial security for the children in your household.
What is a Junior ISA?
ISAs, which stands for Individual Savings Accounts, are savings and investment accounts reserved for UK residents, available in different types and offering attractive tax benefits. The “ISA Junior” variant, also known as JISA, is reserved, as the name suggests, for children. In particular, this type of account can be opened for individuals under the age of 18.
ISAs for children are available in two versions:
- Junior Cash ISA: this is a savings account focused on deposits and characterised by returns from accrued interest;
- Junior Stock and Shares ISA: a real investment tool that allows you to add shares, bonds, fund units and so on to your portfolio.
How they work
Junior ISAs can be opened by a parent or legal guardian of the child. The latter will not have access to the money deposited or invested until the child reaches the age of majority.
When they reach the age of 18, they can decide to transfer the capital to an adult ISA or withdraw the money accumulated and use it to meet their own needs. Flexible and versatile tools, Individual Saving Accounts for children allow you to invest or save up to £9,000 per year and are not subject to taxation on income, interest or capital gains.
Those making payments are not obliged to deposit fixed or particularly large sums, but can deposit or invest both small and large amounts of money in the chosen ISA. In addition, deposits and payments can also be made by other people, such as the grandparents or uncles and aunts of the child who is the account holder.
Open a JISA to build your children’s financial future
The first step in planning your children’s future through a Junior ISA is to decide whether to opt for a savings account, an investment account or both, dividing the money between the two.
In addition to choosing the type of account, it is important to carefully evaluate the characteristics of the service provider, ensuring that it is a serious, solid and reliable organisation, and to consider the requirements for opening a Junior ISA.
For proper planning, it is useful to seek advice from experts in the field and get help in defining a savings or investment plan that is in line with your possibilities and the financial goal you want to achieve before your child reaches the age of majority.
After opening the account, you can immediately start making deposits or investments, according to the procedures indicated by the service provider.