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Junior ISAs - your questions answered in the run up to the tax year end

Junior ISAs can provide another useful tax shelter for a family’s investments in the run up to the tax year’s end. As April 5 looms ever closer, we’ve answered some common questions about this tax-efficient account for children.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

The end of the tax year is the last chance for families to make sure they’re using every tax shelter and benefit available to them before this tax year’s allowances are lost.

Junior ISAs, with their generous annual allowance of £4,080 (this tax year and next), offer parents and grandparents the chance to protect their hard-earned capital and any growth from the taxman, along with the knowledge they’re investing for a child’s future.

Find out more about opening a Junior ISA

Remember: tax rules can change over time and the benefits available, such as to a child through a Junior ISA, will depend on individual circumstances.

If you have any other questions that aren’t answered below, please call our experts on 0117 900 9000.

Quick Junior ISA facts and FAQs

Junior ISAs are tax-efficient accounts for children. They mature when a child reaches 18, when they convert to an adult ISA. The funds in a Junior ISA cannot be accessed until that time, except in extenuating circumstances.

We offer a Junior Stocks & Shares ISA in Vantage. Junior Cash ISAs are also available, and a child can hold one of each (with the annual allowance split as desired between the two).

Parents who open a Junior Stocks & Shares ISA need to feel comfortable with the risks associated with investing in the stock market. The markets will rise as well as fall, so there are no guarantees and a child may get back less than invested.

Is my child eligible for a Junior ISA?

Most children born in the UK who are under 18 are eligible to hold a Junior ISA. However, children born between 1 September 2002 and 2 January 2011 will hold a Child Trust Fund that will need to be transferred to a Junior ISA to open the account (if it hasn’t already been transferred). Once transferred a Junior ISA contribution can be made.

Find out more about opening a Junior ISA

I’d like to put some money into a Junior ISA for my child, but I don’t know where to invest. Can I still open or top up a Junior ISA?

Yes – if you want to secure your child’s allowance for this tax year, then you can open or top up a Junior ISA with cash and make your investment decisions later when you have more time.

Find out how to open or top up a Junior ISA

When you’re ready to invest, we provide a wealth of information to help you choose. Alternatively, busy parents who want a diversified portfolio but haven’t the time or inclination to select investments themselves could consider a multi-manager fund. For example, the HL Multi-Manager Special Situations Trust is a growth-focused fund with an adventurous risk profile, and could be a convenient solution for investors who’d prefer to leave fund selection to our experts.

Find out more about our HL Multi-Manager Funds

Find more investing ideas for Junior ISAs

Please note, the HL Multi-Manager Special Situations Trust is managed by our sister company Hargreaves Lansdown Fund Managers.

Our service is designed for investors who make their own investment decisions without personal advice. We provide a host of research and guidance to help, but the choice of investments is up to you. If you are unsure of the suitability of any investment for your or your child’s circumstances please contact us for advice.

I’d like to open or top up a Junior ISA but I’m not the child’s parent or legal guardian. What can I do?

Only a child’s parent or legal guardian can open a Junior ISA on their behalf. However, once opened anybody can top up the account – all they need are the child’s details. The total contributions must not exceed the annual allowance of £4,080.

Find out how to open or top up a Junior ISA

Contributions made to a Junior ISA by someone other than the parent or legal guardian who’s the registered contact on the account will be held as cash.

How much can I contribute, and how often?

The maximum that can be paid into a Junior ISA in any one tax year is currently £4,080. There is no lower limit on how much you can contribute, however the minimum lump sum that can be invested is £100. It’s also possible to set up a regular payment into a Junior ISA, from £25 per month. Anybody – parents, grandparents, other relatives or family friends – can set up a regular savings instruction to pay into a Junior ISA.

I think my child has a Child Trust Fund (CTF). Can I transfer before the end of the tax year, and how do I go about it?

Transfers from CTFs to Junior ISAs take on average three weeks to complete. With the tax year ending on 5 April, there isn’t sufficient time to transfer.

However, this may work in your favour, depending on your child’s birthday. The annual allowance for a CTF is also £4,080, but with CTFs the year starts with their birthday rather than the tax year. So if, for instance, a child’s birthday falls tomorrow, a parent could top up their CTF today (this year’s allowance), on Monday (next year’s allowance) and then transfer to a Junior ISA to use the new tax year’s allowance.

Transferring as soon as possible after the tax year begins means parents can maximise the investment in a child’s Junior ISA. Before transferring, ensure you understand how the transfer will be made and that your child will benefit as a result.

My child holds a Junior ISA elsewhere. Can I transfer to HL?

Yes, you can transfer both Cash and Stocks & Shares Junior ISAs to us. As per CTFs above, the process can take a number of weeks, and remember that if you don’t transfer as stock you’ll be out of the market for a period.

As it’s only possible to hold one Junior ISA of each type, if a transfer is being made to the same type of Junior ISA it would need to be transferred in its entirety. If a transfer is being made to a different type of Junior ISA, a partial transfer can be made. So, if transferring from one Junior Stocks & Shares ISA to another Junior Stocks & Shares ISA, the whole Junior ISA must be transferred (as it’s not possible to have two different Junior Stocks & Shares ISAs).

If transferring from a Junior Cash ISA to a Junior Stocks & Shares ISA, a partial transfer can be made as a child is allowed one of each type of Junior ISA.

The same form that enables a CTF to Junior ISA transfer can be used for Junior ISA to Junior ISA transfers too.

I’ve fully subscribed to my child’s Junior ISA – what other tax-efficient accounts for children are there?

We also offer a Vantage Junior SIPP (Self-Invested Personal Pension) and a Junior Investment Account (a Fund & Share account designated to a child). The Junior Investment Account, whilst not a tax-efficient account for a child, can be used as part of a family’s financial strategy to reduce the inheritance tax burden on future generations.

Find out more about our other accounts for children

If you’d like to open a Junior ISA please ensure you read our Terms & Conditions (including Tariff of Charges) and Key Features before applying.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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