Bringing Up Baby- The Junior ISA

The Junior ISA launched last week – without too much of a fanfare (there are rather more pressing problems for investors at present). Anyhow, a JISA (yes it is an awful acronym) enables anyone under 18 that does not have a Child Trust Fund, to invest up to £3600 per tax year. In essence this is an investment that, like an ISA, grows free of capital gains tax and the bulk of income tax (10% dividend tax is automatically deducted thanks to Mr Brown).

There are a few investment companies now starting to offer a JISA. The main advantage over the CTF is the fund choice – which is much wider and therefore better. The JISA will convert to adult status at 18 which has a higher annual tax year allowance.

So the JISA is predominantly aimed at those investing for up to 18 years. Another often forgotten allowance is that a pension can be set up for a child. The allowance is also £3,600 – but gross – so in reality this is £2,880 with basic rate tax relief provided at source. Obviously a pension is a longer-term investment (particularly for a child) with the earliest access at age 55 under current rules. However it can be a way in which to scrape back some of the taxes lost to the family, albeit one that requires a very long-term perspective. All this adds to the options for helping to provide for children (or Grandchildren).

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email