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Government doubles Junior ISA limit to £9k
These current circumstances will have many families focused upon the immediate future, the next few months, how to adjust to homeschooling and spending significantly more time together. However, life must go on and although our futures may be different, saving for our children’s futures are still a high priority. Junior ISAs provide an excellent way to invest in their future, and the doubling of the tax-free annual allowance allows those who can to contribute more than ever before.
What is a Junior ISA?
It is a tax-free savings account which is only available for children below the age of 18.
There are two types:
- Cash Junior ISA: deposit based account available in banks and building societies.
- Stocks and shares Junior ISA: invest your child’s savings in a stock market investment.
Each eligible child can only have one cash and one stocks and shares Junior ISA.
What are the recent changes?
Before the recent changes, £4,368 could be paid into a Junior ISA in the 2019 to 2020 tax year. However, following the 2020 Budget, the allowance has more than doubled.
In the 2020 to 2021 tax year, up to £9,000 can be paid into a Junior ISA.
How much can you save?
Up to the maximum Junior ISA allowance, which is £9,000 in the 2020/21 tax year.
The allowance resets every tax year and you can add a new allowance to your Junior ISA each tax year until your child turns 18.
If you open a cash Junior ISA and a stocks and shares Junior ISA you have to make sure you do not collectively exceed the Junior ISA allowance each tax year, as the allowance is shared over both types.
Who Can Open a Junior ISA?
This depends on the age of your child:
- If they are under 16 years old: a parent or guardian needs to open the Junior ISA on their behalf.
- If they are 16 or 17 years old: they can open a cash Junior ISA themselves, but not a stocks and shares Junior ISA.
If you open a cash Junior ISA on behalf of your child it will automatically switch into their name when they turn 16, but they will not be able to access the money until they turn 18.
What’s the next step?
If you wish to top up or open up a Junior ISA or would like to speak to someone about your other investments, we’re here to help you. You can either phone us directly or click below to book a meeting with one of our professional advisers.
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Ascot Wealth Management Limited is authorised and regulated by the Financial Conduct Authority reference 551744. Our registered office: Scotch Corner, London Road, Sunningdale, Ascot, Berkshire, SL5 0ER. Registered in England No. 7428363. www.old.ascotwm.com Unless otherwise stated, the information in this document was valid on 3rd February 2017. Not all the services and investments described are regulated by the Financial Conduct Authority (FCA). Tax, trust and company administration services are not authorised and regulated by the Financial Conduct Authority. The services described may not be suitable for all and you should seek appropriate advice. This document is not intended as an offer or solicitation for the purpose or sale of any financial instrument by Ascot Wealth Management Limited. The information and opinions expressed herein are considered valid at publication, but are subject to change without notice and their accuracy and completeness cannot be guaranteed. No part of this document may be reproduced in any manner without prior permission. © 2017 Ascot Wealth Management Ltd. Please note: This website uses cookies. To continue to use this website, you are giving consent to cookies being used.
