Today, British citizens who want to put money aside for their future have several options at their disposal and among the most popular accounts there are ISAs. The acronym “ISA” stands for Individual Savings Account: it is a particular type of savings account that gives the holder the chance to save or invest money in accordance with his preferences and needs. In fact, today you can choose between many types of ISA: every account available has been intended to accommodate certain categories of people. The money you put into your savings account will always be tax-free, thus Capital Gain Tax and income tax will not be applied.
All UK residents over the age of 16 can open an Individual Savings Account. You can also decide to open a special type of ISA to put money aside for your underage children. In fact, the Junior ISA (JISA) currently represents one of the most common solutions to put money aside for children’s future. In fact, it can be opened both by a parent or legal guardian, and other family members and friends can contribute as well. There are two different types of ISAs for children, the Cash ISA and the Stocks and Shares one. Once you’ve analyzed their characteristics you may be able to determine the best children’s ISA savings accounts according to your financial situation and needs.
The many types of Junior ISAs
As mentioned above, Junior ISAs are available in two different kinds. In fact, today you can choose the approach you prefer to put money aside for your family. The first one, which is also the most popular, is called a Cash Junior ISA, which is kind of like a savings account designed for underage children. When opening a Cash Junior ISA, you’ll be able to put money aside for your son or daughter, who will be given access to it as soon as they come of age. On the other hand, Stocks and Shares Junior ISAs have been created for investments. In fact, you can open one to give your savings the chance to grow and to ensure a more stable economic future for your children. Of course, just like with any other type of investment, you should take into account that your children might end up getting less than expected. All investments are risky and unpredictable, and their outcome will always and solely depend on market volatility. However, by opening a Stocks and Shares ISA you’ll be able to invest in a tax-efficient way.
What is the annual ISA allowance?
Junior ISAs are just like regular ISAs except they have been precisely intended to help you save money for your underage children. Just like any other type of ISA, a JISA comes with a restriction on the maximum sum that can be deposited in a year. This value is called annual ISA allowance and in the United Kingdom, it now amounts to £20,000 per year. Things change for Junior ISAs, the allowance of which is up to £9,000 per year. As mentioned above, parents and legal guardians aren’t the only ones who can deposit money in the fund. In fact, other family members and friends can give their contribution as well. Your children will be able to take control of their account at 16, but won’t be able to access their money until they reach the age of 18 years old. When opening a JISA, you should always take into account the fact that, once they reach the age of majority, your children will be able to use their savings however they want.
