Have you maximised your ISA allowance?

A Junior Investment Savings Account (otherwise known as a Junior ISA, or JISA) is a tax efficient way to invest money on your child’s behalf.  The tax advantages and flexibility they provide make them a savvy option for parents who want to invest in their child’s future, as any returns from children’s ISA are tax-free, meaning they are free from Income Tax and Capital Gains Tax.

What is the Junior ISA allowance for 2021/22?

• In 2021/22, the current maximum amount that can be invested in a Junior ISA is £9,000. This savings account can be contributed to by parents, grandparents, friends or family.

Money held in a Junior ISA is locked in until the child reaches 18, after which it automatically converts into an adult ISA. The newly 18 year old then has full access to the funds.

Gifts from Grandparents

Although JISAs must be established by a parent or legal guardian, they can be used if a grandparent wants to give a lump sum to their grandchildren. Instead of giving cash gifts, using a Junior ISA is a smart way to put away money for the future. Gifting money in this way is also a great opportunity for those with estate planning needs who want to see their wealth passed on effectively to younger generations.

Paying for big-ticket items with JISAs

There are a few big-ticket items that a child needs when they reach 18. Funds for university, a new car, a year out travelling. Investing a little each month into a Junior ISA means that money will be there for them to access at a time when they might need it the most. Maximising the tax-free child ISA allowance will benefit them in later life when it comes to moving out and settling down.

Junior ISAs teaches your child about the benefits of saving

Educating children on finance and getting them engaged in monitoring their savings can help them make better decisions later on. It will also help them see the value of long-term savings and investments.

How Our Derby Financial Advisers Can Help 

Whether you are looking to open a Junior ISA for your children or transfer an existing Junior ISA or Child Trust Fund, we’re here to help and provide you with expert financial advice according to your situation. Contact our financial advisers in Derby today on 01332 497670, or email us at rwm@sjpp.co.uk.

The value of an ISA with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise.

The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.