|
Tax Free Junior ISA - Junior Cash ISA
What is a Junior ISA?
Is my child eligible for a Junior ISA?
What are the different types of Junior ISA?
When can I open a Junior ISA Account?
How many Junior ISA’s can I have?
How much can I pay into a Junior ISA?
Can Grandparents pay into a Junior ISA?
What are the tax benefits of a Junior ISA?
What happens if we move abroad?
What happens if I change my mind after opening a Junior ISA savings account?
What if we have a Child Trust Fund?
What if my question is not answered here?
What is a Junior ISA?
 A Junior ISA or Junior Individual Savings Account is a simple savings account for your child and unlike regular savings accounts, you are allowed to keep any interest earned without having to pay income tax on it. The Tax Free Junior ISA was brought in to replace the Child Trust Fund in 2011.
Is my child eligible for a Junior ISA?
Any child who is resident within the UK and who isn’t eligible for a child trust fund can hold a Junior ISA Account.
If your child was born on or after the 3rd January 2011 then they are eligible for a Junior ISA.
If your child was born before September 2002 and are still under 18 years of age then they are eligible for a Junior ISA.
What are the different types of Junior ISA?
There are two different types of Junior ISA: The Junior Cash ISA and the Investment Junior ISA. The Cash Junior ISA works pretty much like a normal savings account and the Investment Junior ISA will hold investments such as stocks and shares for example.
When can I open a Junior ISA Account?
The Junior ISA will officially be launched on the 1st November 2011 .
How many Junior ISA’s can a child have?
You are permitted to have only one of each Junior ISA savings plan per child (one Cash Junior ISA & one Investment Junior ISA). Please note that if your child holds one of each Junior ISA Account they do not have to be with the same provider.
Can Grandparents pay into a Junior ISA?
Yes, Grandparents can contribute towards a junior isa for their grandchild / grandchildren. In fact, anyone who has an interest in the child’s financial future can pay into their Junior ISA Account as long as the annual contribution allowance is not exceeded.
What are the tax benefits of a Junior ISA?
There will be zero tax payable on any income earned from the Junior ISA whether it be a cash ISA or an investment Junior ISA. This income can include interest, dividends and any bonuses earned. There will be no capital gains tax charged and once your child reaches adulthood they can withdraw their money without losing any tax benefits. Your child will not have to declare any earnings made from their Tax Free Junior ISA and there is no need to declare to the tax office that you have an ISA for your child.
What happens if we move abroad?
You can only open a Junior ISA savings account if you are a UK resident for tax purposes. If you are employed by the crown (for example you are a diplomat or soldier work abroad) then you can open a Junior ISA.
If you move abroad after already opening an account then you are not allowed to make payments into the account. You can still keep the Tax Free Junior ISA in place and it will continue to earn tax free interest and when you return to the UK you are then able to continue paying money into it. If you are in any doubt then please contact your local tax office to confirm your status and eligibility.
What happens if I change my mind after opening a Junior ISA Savings Account?
Some Junior ISA’s will offer what is known as a ‘cooling off period’ which allows you to cancel within a certain time limit (14 days for example). If you cancel within this time then payments you have made will not count towards an Junior ISA subscription for that tax year and you are free to pay money into an alternative ISA for the same tax year.
If you decide to cancel after your cooling off period then any payments will count as an ISA subscription and you are then not permitted to pay into another Junior ISA of the same type for that current tax year. However, you are able to transfer your Junior ISA to another Junior ISA Manager.
What if we have a child trust fund?
The Tax Free Junior ISA was created to replace the Child Trust Fund and if your child currently has a trust fund in place then you will not be able to open a junior isa in their name as well. Whilst Child Trust Funds have now stopped, if you have one you can still keep it going and pay money into it but the government will no longer be contributing towards the fund like it use to do (the government would have made a contribution during the first six months of your childs life providing you opened a trust fund and also a payment would have been contributed on your childs seventh Birthday). The annual deposit limit of the Child Trust Fund is also to be increased to £3600 per year in line with the new Junior ISA Account.
Update: The government may eventually announce that you will be able to transfer a child trust fund to a Junior ISA. Another possibility is that they may even merge to two products together, but no details have been confirmed yet.
What if my question is not answered here?
If you still have any questions regarding a Junior ISA then please register your email with us and we will keep you informed of the progress of the Junior ISA and any important changes that may happen.
|
