Junior ISAs Explained: What They Are, How They Work, and Whether to Bother
By calculatemysalary.co.uk Editorial Team
Junior ISAs let you save up to £9,000 a year tax-free for your child. The money is locked until they turn 18. Here is how both types work.
A Junior ISA is a savings or investment account for children under 18 in the UK. You can put up to £9,000 in per tax year (2025/26), and the returns — whether interest or investment gains — are completely tax-free.
The catch: the money is locked away until the child turns 18. They get control of it then, not you. That is worth thinking about before you commit.
Two types of Junior ISA
Cash Junior ISA — Works like a normal savings account. You deposit money, it earns interest, no tax is deducted. Rates vary by provider, but the capital is not at risk.
Stocks and Shares Junior ISA — Your money is invested in funds, shares, or bonds. Returns can be higher over the long term, but the value can also fall. Over an 18-year horizon this volatility usually smooths out, but there are no guarantees.
You can hold one of each type at the same time. The combined total across both cannot exceed the £9,000 annual allowance.
Who can open one
A parent or legal guardian opens the account. The child must be:
- Under 18
- A UK resident
Once it is open, anyone can pay in — grandparents, aunts, family friends. That makes Junior ISAs popular for birthday and Christmas money that would otherwise get spent on sweets.
If your child has an old Child Trust Fund (CTF), you can transfer it into a Junior ISA. The providers handle the paperwork. See GOV.UK Junior ISA guidance for full details.
How the money grows
The annual allowance resets every tax year (6 April to 5 April). If you do not use the full £9,000 in one year, it is gone — allowances do not roll over.
Here is what consistent contributions look like over time:
| Monthly contribution | Total paid in over 18 years | Estimated value at 5% growth* |
|---|---|---|
| £50 | £10,800 | ~£17,400 |
| £100 | £21,600 | ~£34,800 |
| £200 | £43,200 | ~£69,600 |
| £750 (max) | £162,000 | ~£261,000 |
Assumes Stocks and Shares Junior ISA with 5% annual growth, compounded monthly, no fees deducted. Actual returns will vary. Cash Junior ISAs will grow more slowly.
Even £50 a month adds up to a meaningful sum when the child turns 18 — enough for a university deposit, driving lessons, or the start of a house savings fund.
What happens at 18
On the child's 18th birthday, the Junior ISA automatically converts into an adult ISA. The child (now an adult) takes full control. They can withdraw the money, keep it invested, or add to it under the normal adult ISA allowance.
You cannot stop this. If you are worried about an 18-year-old suddenly having access to tens of thousands of pounds, that is a fair concern. Some families have honest conversations about the money well before the birthday. Others opt for smaller contributions and use other vehicles (like a pension or trust) for larger amounts.
At 16 and 17, your child can also open an adult Cash ISA alongside their Junior ISA. That means they get two ISA allowances for those two years — a useful bit of flexibility.
Junior ISA vs just saving in your own name
If you save for your child in your own savings account, the interest counts as your income and may be taxable. A Junior ISA avoids this entirely because the returns are tax-free in the child's name.
There is also the benefit of separation. Money in a Junior ISA is legally the child's. You cannot dip into it, which is either a feature or a bug depending on your self-discipline.
Things to check before opening one
- Provider fees — Cash Junior ISAs usually have no fees. Stocks and Shares Junior ISAs charge management fees, typically 0.15% to 0.45% of the fund value per year. These compound over 18 years, so pick a low-cost provider.
- Interest rates — Cash Junior ISA rates change. Compare current rates before committing.
- Your own savings — If you have not maxed out your own ISA allowance or pension contributions, those might be more tax-efficient first. A Junior ISA is great, but not at the expense of your own retirement.
- Accessibility — This money is locked for years. Make sure you will not need it back.
How to open a Junior ISA
- Compare providers. Moneyfacts, Comparethemarket, or the provider websites directly all list current rates and fees.
- Apply online or by post with the child's details and your ID.
- Set up a standing order if you want regular contributions — it is easier than remembering to do it manually.
- Tell family members the account details if you want them to contribute for birthdays or Christmas.
Use our salary calculator to work out your take-home pay and figure out how much you can realistically set aside each month.