Individual Savings Accounts are some of the most popular kinds of accounts available for British citizens. They can also be called ISAs and they represent a very good chance to save or invest money in a tax efficient way. This means that when you deposit your capital on an Individual Savings Account you won’t have to pay any tax on it. Obviously, this is one of the main reasons behind the great popularity of these new kinds of account, which nowadays are opened by people of all ages. Also, all UK residents are eligible to open one and they can choose between a great diversity of different accounts according to their preferences. As a matter of fact, each ISA has been specifically intended to meet the needs and tastes of certain categories of holders, and that’s why so many different types have been created. There’s a special ISA intended to help you save money for life related purchases, another one particularly suited for investments and so much more. One of the most popular kind of ISAs is the Junior ISA, which is an Individual Savings Account designed to help parents save for their underage children. It can also be called JISA and it might represent a good way to put money aside for your kids, who will be able to access it as soon as they come of age. Being just like a regular ISA, the money you deposit on a JISA will always be protected from tax as well. Nowadays you can easily choose the best children’s isa by doing some research and evaluating your needs and willingness to take risks. Let’s have a look on how JISAs work.
How do a JISAs work?
Junior ISAs are just like regular ISAs except they have been specifically designed for underage children. They can be opened both by a parent or legal guardian to put money aside for their children’s future. Other family members and friends can contribute as well by depositing how much they prefer. Even though the annual allowance for every type of ISA currently amounts to £20.000 per year, on a Junior ISA you can deposit a maximum sum of £9.000 per tax year. The minimum amount that can be monthly deposited is £25. As mentioned above, your children won’t be able to withdraw the money put aside until they come of age. This means that as soon as they turn 18, they will be able to access their money.
How many types of Junior ISAs are there?
Junior ISAs come in two different types. The first one is called a Cash Junior ISA, which is the closest you can get to a regular savings account for underage children. By opening one you’ll be able to put money aside for your son or daughter, who will be able to access it when they turn 18. On the other hand, the Stocks and Shares Junior ISA is more similar to an investment account. By opening one you’ll be able to collect money for your underage children and to invest it in a wide range of assets with the goal to make it grow over time. When opening this kind of account, you should always take into account the risk that comes with any type of investment. Even though a Stocks and Shares Junior ISA could represent a good way to secure a significant amount for your children, the money you deposit is put at constant risk. The amount your children gets will only depend on the performance of your investments and therefor it will be unpredictable.