The Junior ISA limit has gone up to £9,000 for the new tax year 2020/21 – almost double what it was previously. The new limit, up from £4,368, was announced in the Budget last month and is the highest increase we have seen since Junior ISAs were launched in November 2011. Junior ISAs are long-term savings accounts for children, which allow parents and legal guardians to put money away in a tax efficient way. Here’s what you need to know about Junior ISAs:
- Just like adult ISAs, you can save into either a cash Junior ISA or an investment one.
- With a cash ISA, you will earn interest on your money. Interest rates are currently very low, so it’s important to hunt around for the best possible rate.
- You can also put money into a Stocks and Shares ISA, which would potentially give you better growth. Stock markets go up and down, but these are long-term investments, which gives your investments time to grow.
- If you invested last year’s full Junior ISA allowance of £4,368 in a stocks and shares ISA every year for 18 years, your child’s junior ISA could be worth £125,295. If you put away £9,000 every year for 18 years, your child would have a savings pot worth of £258,495
- The account can be opened by and controlled by the parent or legal guardian, but anyone can pay into it for your child.
- Once the money is put into a Junior ISA, it belongs to the child and only they can access it once they are 18.