What is a Junior ISA?

What is an ISA? 

An ISA (Individual Saving Account) is an account that allows you to save or invest money without paying tax on the interest or gains earned. For anyone over 18, there are different types of ISA, and you have an annual ISA allowance of £20,000 in the current tax year – this can be split across different ISAs, such as Cash, Stocks & Shares, or Innovative Finance ISAs. ISAs are particularly good for mid to long-term goals, such as for a house deposit or a car, because the money in your ISA stays tax-free year after year.  

What is a Junior ISA? 

The allowance for a Junior ISA works a little differently. Even though the account is opened and managed by a parent or guardian, the allowance is for the child and is separate from their parent’s allowance. This means that, in theory, a parent could use their entire £20,000 allowance in their own ISAs, and still contribute £9,000 per year and per child in a Junior ISA.  

And it’s not just the parent or guardian that can pay into a Junior ISA – anyone can contribute, so grandparents, godparents, or friends can choose to gift money too, for example. However, the £9,000 limit still applies overall, regardless of who is paying into the account, and it’s only a parent or guardian who can open the account.  

A child can have up to two Junior ISAs: one Cash ISA and one Stocks & Shares ISA. Every child has a £9,000 limit per year, which is applied across both ISAs. The money belongs to the child, and cannot be withdrawn from the account until they’re 18, except in very limited circumstances – although it can be transferred to a different provider. 

When a child turns 18, the Junior ISA will automatically become an ISA for adults. The type remains the same: if it was a Junior Cash ISA, it becomes a Cash ISA. If it was a Junior Stocks & Shares ISA, it becomes a Stocks & Shares ISA. They will have full control over the money and at this point, they can continue to save in it, or they can choose to withdraw any money they need.  

How does a Junior Cash ISA work?  

A Junior Cash ISA works like a regular savings account, where any interest earned is tax-free. The account must be opened and managed by a parent or guardian, or if a child is aged 16 or over then they can open and manage an account themselves. In both cases the money is locked away until they are 18.  

How does a Junior Stocks & Shares ISA work?  

A Junior Stocks & Shares ISA holds investments instead of cash. The money can be invested in things like funds, individual shares, or bonds. Any dividends or returns your child earns in a Junior Stocks & Shares ISA are tax-free. 

Investments are more suitable for long-term saving, for example 5 years or more, so that makes them a good option when you’re saving for a child. Money held in a Junior Stocks & Shares ISA is locked away until the child turns 18, which gives investments more time to potentially grow, making them more suitable for accounts opened for young children.  

In a Triodos Junior Stocks & Shares ISA, you have the choice of investing in or across four different funds which are focused on ethical investments. They all have different goals and levels of risk. You can find out more about these funds and the fees charged for managing your investments here.  

In the past, investments have often grown more than cash savings, but this doesn’t guarantee the same will be true in the future. When you invest, your money is at risk. The value can go up or down, so you could get back less than you put in. Holding investments for the long-term gives more time for any ups and downs in the market to balance out. 

Building a world our children can thrive in 

Why Triodos Junior ISAs are different

We all want future generations to inherit a healthy, thriving planet. When you choose Triodos Bank for your child’s accounts, you’re not just saving for their future. You’re helping to support a fairer and more sustainable world for them to live in.  

The money in a Triodos account will be used directly to fund and invest in areas working towards positive change, such as clean energy, better healthcare, organic farming, nature restoration, and affordable homes.  

A Triodos account can also help your child learn from an early age that money can be used with care and purpose. It is a powerful way to build money habits that can stay with them for life.