Junior ISAs: the lowdown

Junior ISAs are being introduced this autumn with the aim of encouraging families to start saving for their children from an early age, so how do they work and what are the rules?

Junior ISAs or JISAs are finally set to launch on 1 November so here's the full lowdown to all you need to know.

They're available to anyone born on or after 3 January 2011. Under-18s who don't already have a child trust fund can also open one.

Both cash and stocks and shares ISAs will be available and each tax year it's possible to transfer to different ISAs. Unlike regular ISAs you can't hold JISAs with different providers – even from previous tax years. One way around this would be to choose a stocks and shares JISA with access to fund supermarkets. That way you can still invest with different providers.

Children won't be able to access the money until they turn 18. After that they can either withdraw the money or it will default to a normal ISA.

When the child is 16 they also have the option of taking out regular adult cash ISAs on top of their JISA.

The maximum annual allowance is £3,600 and monthly contributions could be as little as £10.

Unlike its predecessor the child trust fund, there are no government top ups to the JISA.

But the advantage is that it encourages families to start saving for their children from a young age which is nothing to be sniffed at.

And the figures speak for themselves: if you were able to invest the full £3,600 every year from when your child is born until they turn 18, the total ISA pot could be worth just over £100,000.

Contact providers directly to apply to their JISAs and before filling in the form look at all the options just as you'd compare different accounts for terms and rates.

Your Comments

This is a veritable minefield. Given that the banks pay as little as 0.5% on ISAs today would you really consider tying in your child's money for EIGHTEEN YEARS?
The Bankers must rubbing their hands with glee. Watch them offer high rates to begin with and then take advantage of your children just as they have done with you.
Gordon Brown's idea was that we should have a portion of our savigs tax-free. The silly man did not realise that the banks would cash in on this by cutting interest rates somewhere down the line. There is no regulation to force them to give reasonable rates. Do this silly duo realise this or are they quite happy to see the same thing happening to our children?

if you're saving for your child over 18 years, and particularly in today's interest rate environment, then you'd probably be looking at a Shares JISA rather than Cash, and switch as you get nearer to maturity.

so the 'greedy bankers' won't get your cash and you've at last a chance of beating inflation.