16-year-olds can open two ISAs in the same tax year

24 January 2012

16 to 18-year-olds can open two cash ISAs in the same tax year - something that is not allowed for anyone else.

This is because 16-year-olds are eligible to open their own adult cash ISA, worth £5,340 (or £5,640 next tax year), as well as save up to £3,600 in a junior ISA (JISA).

This means they can save almost £10,000 each tax year in cash ISAs.

"The ability for children aged 16 and 17 to have both a JISA and an adult cash ISA is something that has not been widely publicised but is something that, if possible, families should make the most of," says Paul Kennedy, head of tax planning at Fidelity FundsNetwork.

Perfectly legal

While it almost sounds too good to be true, Kennedy reassures parents that it is perfectly legal to hold both types of ISA.

The full £3,600 JISA amount can be saved in cash or divided between cash and stocks and shares.

However, while children can open an adult cash ISA at the age of 16, they won't be able to open a stocks and shares adult ISA until they turn 18.

The cost of bringing up a child to age 21 is now £210,000, according to insurer LV=, so the chance to increase a child's savings will therefore be welcomed by parents, says Kennedy.

"Assuming a young adult takes advantage of both this and next year's full cash ISA allowance, they would have saved an extra £10,980. If that £10,980 were to grow at an average tax-free interest rate of 4%, it would add about a further £18,000 to the overall ISA pot around the age of 30 – and that's not even including any JISA savings."


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