An ISA is an Individual Savings Account that represents the new frontier of investments. Nowadays, ISAs are the most common savings account because they allow the account holder to save or invest money depending on his preferences, and without paying any tax on it. Another reason why ISAs are so popular is that they allow all UK residents to own an account, even underage people. The amount of money a person can deposit every year is called “annual ISA allowance” and it currently amounts to £20.000 per year.
There are many types of ISAs available in the United Kingdom, and one of the most popular is currently the Junior ISA (JISA), which can be opened by a parent or by a legal guardian for their underage children. This is a tax-efficient way to save money for your children’s future because it allows you to pay no income tax on your investments. The annual ISA allowance for a Junior ISA is a bit different from the regular one: you will be indeed able to save £9.000 per year. The money you put on your child’s fund won’t be withdrawable until he reaches 18. When you invest in a junior stocks and shares isa for your child, you as a parent or a legal guardian, won’t be the only one able to deposit money on the account. The minimum amount which can be deposited each month is £25. Your son or daughter will be eligible to own a Junior ISA if they are under 18, they live in the UK and they don’t already own a Stocks and Shares ISA or any other kind of child trust fund. If this is the case, you will have to transfer the money you save from the child trust fund to your new Junior ISA.
Things to remember when you open a Junior ISA
Nowadays, more and more families decide to open a Junior ISA to try to ensure a solid economic future for their children. Even though a JISA is a very smart option in so many ways, there are some important factors to take into account before opening a fund. For instance, you have to keep in mind that the value of all the investments you make for your child could grow over time, but they could also go down as well. This means that your child could end up receiving less than what you punt into his JISA. Also, all the tax rules applied to your investment might change over the years. Another issue to consider is that you or your child won’t be able to withdraw the money until he is 18 years old. You have to agree that your children will be allowed to access all the money you saved for them by the time they reach the age of majority. From that moment on, they will be able to use their money however they want.
Why choose a Junior ISA
A Junior ISA is one of the best options you have to save money for the future of your child,
to grant him access to university, to help him buy a house in the future or just to help him travel. To open a Junior ISA for your child might also be a good idea if what you’re looking for is a long term and tax-free saving account and if you don’t want him/her to withdraw money before they’re 18 years old. Click on https://www.moneyfarm.com/uk/jisa/ to know more.