What is a Junior ISA? Benefits and Allowances Explained

What is a Junior ISA?

A Junior ISA (Individual Savings Account) is a long-term savings or investment account set up by a parent or legal guardian to save money for their child’s future. It offers tax advantages, meaning any interest, dividends, or capital growth are free from UK Income and Capital Gains Tax.

The account is held in the child’s name but managed by the parent or guardian until they turn 18* (*Or at age 16 if the child chooses to become the registered contact on the account). When they turn 18, the funds become fully accessible, and the child can use the money however they choose, for example, to help cover university costs, save for a first home, or continue building their savings.

There are two types of Junior ISAs (JISA):

• Cash Junior ISA – works like a standard savings account, allowing you to deposit money on behalf of your child and earn tax-free interest on it.
• Stocks and Shares Junior ISA – invests in the stock market with potential for higher growth, but with the risk that the value of your investments can go down as well as up.

The annual Junior ISA contribution limit for 2025/26 is £9,000, and friends and family can contribute to the account.  So that birthday money from the grandparents goes towards their future, not just the sweets aisle.

Who can open a Junior ISA?

Grandparents often ask this question, but only a child's parent or legal guardian can open a Junior ISA. Additionally, the child must be under 18 and a UK resident to qualify for this account. However, once the Junior ISA's open, grandparents and other family members are more than welcome to contribute and start investing towards your child's future.

The account remains under the child’s name, and they gain full control over it when they turn 16, with access to the funds at 18.

What are the benefits of a Junior ISA?

A Junior ISA offers several advantages for parents and guardians looking to save for their child’s future:

• Tax-free growth: Any interest, dividends, or capital gains are free from UK Income and Capital Gains Tax.
• Long-term savings: The money is locked away until the child turns 18, helping them to build a substantial lump sum and avoid temptation.
• Ownership by the child: The account is in the child’s name, and they gain control at 16, with full access at 18.
• Flexibility in contributions: Anyone, including family and friends, can contribute, up to the annual allowance (£9,000 for 2025/26). To find out how to set up payments and manage contributions, check out our JISA Payments guide
• Choice of accounts: You can choose between a low-risk Cash Junior ISA or a potentially higher-growth Stocks and Shares Junior ISA (capital at risk).
• Automatic conversion: At 18, the Junior ISA will be transferred into an adult ISA, allowing your child to continue tax-free saving into adulthood.

These benefits make Junior ISAs a popular way for parents to help children with future expenses like university fees, a house deposit, or a first car.

Some ISAs also come with extra perks. Through our partnership with Mini First Aid, you can sign up for a free Baby and Child First Aid Class when you open a Junior ISA and make a deposit (terms and conditions apply). It’s our way of helping you plan for your child’s future, both financially and practically.

Junior ISA considerations

While Junior ISAs are a great way to save for your child’s future, there are a few things to keep in mind before opening one:

• Locked funds: The money is held until your child turns 18, so it’s not suitable if you need access to savings sooner.
• Contribution limits: For 2025/26, the annual allowance is £9,000. You cannot go over this limit.
• Investment risk: Stocks and Shares Junior ISAs can go up or down in value.
• Account restrictions: Each child can hold one Cash Junior ISA and one Stocks and Shares Junior ISA. You can transfer between providers, but you’ll need to follow the rules carefully.
• Eligibility: Only parents or legal guardians can open a Junior ISA, and the child must live in the UK. Children with an existing Child Trust Fund will need to transfer those funds in full first (partial transfers are not allowed).
• Long-term commitment: Junior ISAs are designed for gradual, long-term savings. Regular contributions and patience help to maximise the benefits.

Keeping these points in mind will help you decide if a Junior ISA fits your family’s savings goals.

What is the Junior ISA allowance?

The Junior ISA allowance is the maximum amount that can be contributed to a child’s account in a single tax year. For the 2025/26 tax year, this limit is £9,000.

This allowance applies across both types of Junior ISAs, so you have the flexibility to split it between a Cash Junior ISA and a Stocks and Shares Junior ISA, or put it all into one account. The allowance resets each tax year on April 6th and belongs to the child, meaning it does not affect your own adult ISA allowance.

Transferring a Child Trust Fund to a Junior ISA

If a child has an existing Child Trust Fund, they can’t have a JISA at the same time. However, you do have the option to transfer the funds from their Child Trust Fund into a Junior ISA. Once the transfer is complete, the Child Trust Fund will be closed, and all future savings will go into the JISA instead.

Transferring can be a good opportunity to reduce fees, or invest in a Stocks and Shares Junior ISA if you're looking for the potential for higher long-term growth. Once the transfer is complete, the account continues to benefit from tax-free growth and will remain locked until your child turns 18.

To find out more about how to transfer a Child Trust Fund to a Unity Mutual Junior ISA, use our helpful step-by-step ‘Transfer to us’ guide.

Cash vs Stocks and Shares Junior ISAs

When choosing what Junior ISA (JISA) to choose for your child, it's important to know that there are two types available: Cash and Stocks and Shares. Each comes with its own benefits and risks.

• Cash Junior ISA – Works like a regular savings account, earning interest on your money. It is low-risk, and the amount you put in is guaranteed.
• Stocks and Shares Junior ISA – Invests your money in the stock market through shares, funds, or bonds. While it carries more risk, it has the potential for higher long-term growth.

When choosing a Junior ISA for your child, it’s important to understand the differences between a Cash Junior ISA and a Stocks and Shares Junior ISA to make sure your investing in a way that suits you and your family.

The table below highlights the main features, risks, and benefits of each type to help you decide which option best suits your child’s savings goals.

Other Considerations

You can transfer a Junior ISA between providers to maximise growth potential.  It is also possible to split the £9,000 annual JISA allowance between a Junior Cash ISA and a Stocks and Shares ISA.

Is a Junior ISA right for me?

A Junior ISA can be a great way to save or invest for your child’s future, but it may not suit every family. Consider opening one if you:

• Hope to build your child’s savings in a tax-smart way.
• Understand that the funds can’t be accessed until your child reaches 18.
• Wish to involve family and friends in contributing to your child’s savings.

A Junior ISA may be less suitable if you need immediate access to the funds or prefer a more flexible short-term savings option.

Exceptions to Junior ISAs: Access, transfers, and special circumstances

While Junior ISAs are designed to be long-term savings accounts, there are a few exemptions where withdrawals or special arrangements are allowed:

• Transfers between providers: While not a withdrawal, you can move a Junior ISA from one provider to another to consolidate accounts or get better returns.
• Child Trust Fund transfers: Existing Child Trust Funds can be transferred into a Junior ISA, which counts as an exemption to the “new contributions only” rule.
• Child’s death or terminal illness: In these tragic cases, funds can be accessed before the child turns 18.

Thinking of setting up a Junior ISA on behalf of your child?

Ready to start saving for your child? Find out more about the Unity Mutual Stocks and Shares Junior ISA*.

If you have any questions about Junior ISAs or our other children's savings account, our friendly team is here to help. Just call us on 0161 214 4650 or book a zoom call.

*Terms and conditions apply. Capital at risk.