Updated: January 28, 2020

Junior Stocks and Shares ISAs

Exploring saving options for your children's future? Find out whether a junior investment ISA could be the answer in our guide

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Phil Whitehouse

Author: Phil Whitehouse - Finance Expert

Updated: January 28, 2020

There are many products on the market that can help you save for your children’s future, and a stocks and shares junior ISA is among the most popular options.

In this guide, you’ll learn the difference between these savings accounts and other types of junior ISA, what to look for in child stocks and shares ISAs and how to compare the market.

You’ll find the following topics covered below…

What is a junior stocks and shares ISA?

A junior stocks and shares ISA is a type of savings account that parents and legal guardians can use to make tax-efficient savings on behalf of their children. No income tax or capital gains tax is payable on any returns and the annual allowance for the current tax year (2019-20) is £4,368.

Other family members, and even friends, can also pay into the account.

Like with any stocks and shares-based ISA, the money you put in is invested in stock market equities or collective investment plans, so the price of your investments could rise or fall.

A variety of different assets can be held in a junior stocks and shares ISA, including unit trusts, open-ended investment companies, investment trusts, government bonds and corporate bonds.

A junior stocks and shares ISA automatically passes to the child it was opened for when they turn 18.

How many can my child have?

Each tax year you can only open one stocks and shares junior ISA for your child. You can also open a junior cash ISA for them and pay into it alongside the investment account, but bear in mind that the total contribution between both funds must not exceed the annual allowance cap of £9,000.

Can I withdraw money early?

The funds held in a junior stocks and shares ISA can usually only be withdrawn by the child when they turn 18. The only exceptions to this are if the child becomes terminally ill or passes away.

Can you transfer a junior stocks and shares ISA?

Yes. Junior ISAs are highly transferrable. You can move your funds from a junior stocks and shares ISA into a junior cash ISA, and vice versa. It’s also possible to switch from one provider to another in the hope of finding a better deal.

Make sure you aren’t giving up the tax-free status of your money if you’re transferring to another junior ISA account. Make an enquiry to speak with an expert to ensure you don’t fall into the trap of making the wrong move. The independent financial advisers we work with are investment experts and can advise you on ways to invest to safeguard your child’s financial future.

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Are junior cash or stocks and shares ISAs better?

Which of these two products is best will depend on several factors, including your appetite for risk, your investment knowledge, and how much you’re willing to pay in fees.

Junior stocks and shares ISAs are often chosen by investment-savvy customers who are looking to invest for the long-term. Their flexibility and the potential for higher returns are among the key selling points, but there are fees and charges to foot that don’t apply to cash ISAs.

The most important thing to keep in mind when comparing these two product types is that stocks and shares ISAs for children can offer significantly higher returns than the cash alternative, if you’re willing to take on the higher risk they come with.

Unlike with cash ISAs, the value of your investments could fall, especially during periods of stock market volatility, so it’s important to seek expert advice before investing your assets in a junior stocks and shares ISA. The independent financial advisors we work with can help you choose the product that’s most likely to deliver favourable returns and will offer ongoing investment guidance.

How do I find the best stocks and shares junior ISAs?

The best stocks and shares ISA to help you save for your child’s future would be the one that offers the most favourable returns and dividends, the amount of flexibility you need and a level of risk you’re happy to take on. You should also consider how much you’re willing to pay in fees.

Identifying the product that ticks all of these boxes isn’t always easy, especially if you’re unfamiliar with the market. This is where an independent financial advisor comes in. The experts we work with have access to the entire market and can match you with a junior investment ISA that meets all of your requirements, as well as offer bespoke investment advice going forward.

How to compare products

When comparing junior stocks and shares ISAs in search of the right product, consider the following…

  • Potential returns and dividends
  • Level of risk
  • How much you pay in fees
  • How much investment flexibility you need
  • Whether the fund manager has a strong track record

These factors are good starting points to think about when assessing how one junior ISA compares to another, but it’s important to get a broad overview of the market before choosing a product.

Online rates tables can give you a rough idea of the deals on offer, but keep in mind that they aren’t tailored to your personal profile and often give prominent placement to sponsored products. To get a more representative picture of the entire market and deals that are tailored to your circumstances, goals and appetite for risk speak to an independent financial advisor.

The advisors we work with can compare the whole market for you and help you find a product that meets your requirements at a list level you’re comfortable with.

Speak to an expert

If you’re looking for a junior stocks and shares ISA to give your child a financial boost when they enter adulthood, seeking professional advice pays dividends, quite literally.

The experts we work with have whole-of-market access and can help you find the junior ISA that is most likely to offer the best returns and dividends at the level of risk you’re most comfortable with.

Call 0808 189 0463 or make an enquiry and we’ll introduce you to an independent financial advisor who can help. We won’t charge a fee for referring you on and there’s absolutely no obligation.

Make an enquiry and we’ll introduce you to an expert who can help you choose the product that’s most likely to give your child a good financial headstart when they reach adulthood.

Ask A Quick Question

We can help! We know everyone's circumstances are different, that's why we work with brokers who are experts in ISAs. Ask us a question and we'll get the best expert to help.

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Phil Whitehouse

Phil Whitehouse

Finance Expert

About the author

In 2014 Phil set up and is Head of MCI Club that provides a range of mortgage club support services, including extensive mortgage and insurance panels primarily to Directly Authorised users of The Mortgage Keeper CRM system, which in turn is part of DPR Consulting Group.

Immediately before setting up MCI Club, Phil started a range of financial services support businesses, and previously ran TMA Mortgage Club for five years and prior to that looked after supplier relationships for Pink Home Loans from 2001 until 2007.

His early career was spent in the retail banking sector, notably with Halifax where he held a number of Management roles.

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