While anyone (including parents, grandparents and friends) can contribute to a Junior ISA, only the registered contact (a parent or legal guardian) is able to give instructions about where to invest the money.
Unlike adult ISAs, a child is only able to hold one type of each Junior ISA account (one Junior Cash ISA and one Junior Stocks & Shares ISA. Therefore, you need to use each year's annual allowance by topping up the existing accounts).
Contributions can normally be made to Junior ISAs either with a lump sum payment or via monthly payments. Using the full 2017/18 JISA allowance (£4,128), a regular contribution would equate to a regular investment of £344 per month for 12 months.
Whilst the rules state a child can only have one Junior Stocks & Shares ISA and one Junior Cash ISA at any one time, transferring between the two is acceptable.
You are also free to switch your child's Junior Stocks & Shares ISA or Junior Cash ISA provider. However, since only one of each type of Junior ISA is permitted, you would need to transfer the full amount of your child's existing Junior Stocks & Shares ISA to any new provider.
CTFs were launched in 2005 as a way to encourage parents to save tax-efficiently for their children's future. Most children born between 1 September 2002 and 2 January 2011 would have received a voucher from the government worth at least £250, which could be used to set up a CTF.
In November 2011, CTFs were replaced with Junior ISAs which shared many characteristics (including their tax efficiency), but were much simplified and improved. Junior ISAs have proven more popular with parents as they typically offer more competitive charges and greater investment choice to enable potentially greater returns.
To transfer a CTF to the Junior Stocks & Shares ISA, the registered contact for the CTF (parent or guardian) must complete and return the Junior Stocks & Shares ISA Transfer form.
There is no capital gains tax and no UK income tax to pay on the income on the investments in a Junior ISA. They don't need to be declared on any tax returns, and this simplicity makes them the first port of call for many parents and grandparents looking to save for a child's future.
Please note that tax rules can change over time and the benefits to the child will depend on their individual circumstances.
When money or assets are paid into an account (including Junior ISAs, Junior SIPPs and designated accounts) for someone else's benefit, they are treated as a gift. Some gifts are free or exempt from tax, others may be subject to inheritance tax.
Children face an uncertain financial future; many will have accumulated a significant debt burden of their own before they commence work - Junior ISAs can provide a nest egg.
Money paid into a JISA is treated as the child's. All interest earned is free of tax (unlike children's savings accounts, where income over £100 on contributions from a parent is taxed as the parent's income). Anyone can add funds to a Junior ISA - parents, grandparents, friends and relatives. Many children continue saving and investing after they can access their Junior ISA.
The HL Junior ISA - one of the most popular on the market
In 2015/16, over 22% of all Stocks & Shares Junior ISA subscriptions were made with Hargreaves Lansdown
You can open a Junior ISA for an eligible child quickly and easily online.
You can start investing for your child from as little as £25 per month or a lump sum of £100. Once a child's account has been opened by a parent anyone can make a subscription e.g. parents, grandparents, friends and relatives.