Junior ISA Calculator

The short answer

• Up to £9,000 a year can go into a child’s Junior ISAs, from anyone.
• Interest, dividends and gains are tax-free.
• £100 a month from birth, growing at 5% a year, could reach about £34,500 by 18, from £21,600 paid in.
• The money belongs to the child and cannot be taken out before 18.

What a Junior ISA is

A Junior ISA is a long-term, tax-free account for a child under 18 who lives in the UK. A child can have one cash Junior ISA and one stocks and shares Junior ISA at the same time, and the £9,000 allowance is shared between them. You can transfer between providers without losing the tax-free status.

Who can open and pay in

A parent or legal guardian opens the account. Once it is open, anyone can pay in: parents, grandparents, other relatives and friends. The child can open their own from age 16. Money paid in is a gift to the child, so it cannot be taken back.

Cash or stocks and shares?

Over 18 years, shares have historically beaten cash in most periods, but with no guarantee. Many parents invest for the early years and move some into cash as 18 gets closer.

Worked examples

The same £100 a month at 2% would reach £25,929. Paying in the full £750 a month at 5% would reach about £258,943. A single £1,000 gift at birth, growing at 5%, would be worth about £2,407 at 18.

Why starting early matters

With compound growth, money paid in early has longest to grow. In the £100-a-month example, the payments made in the first five years end up worth far more than those in the last five. If you can only afford to save for part of a child’s childhood, the early years matter most. Use the calculator’s chart to see how the gap between paid in and value widens with age.

Fees and how much they cost

Stocks and shares Junior ISAs charge platform and fund fees, usually 0.2% to 1% a year in total. Over 18 years they add up: on £100 a month, cutting yearly growth from 5% to 4.5% with 0.5% fees reduces the value at 18 from £34,526 to £32,885, about £1,640 less. Low-cost index funds keep charges down. Cash Junior ISAs have no fees, but rates vary, so check yours each year.

The £100 rule for parents

Children have their own Personal Allowance and savings allowances, but there is an anti-avoidance rule: if money given by a parent earns more than £100 of income a year outside an ISA, all of that income is taxed as the parent’s. Junior ISAs and Child Trust Funds are exempt, which is one reason they are the usual way for parents to save for a child. Gifts from grandparents and others are not caught.

Other ways to save for a child

• Children’s savings accounts: easy access, but subject to the £100 rule for parents’ money.
• Premium Bonds: can be bought for a child under 16 by a parent or grandparent; prizes are tax-free.
• Junior SIPP: a pension for a child, with tax relief, but locked until at least 57.
• Saving in your own ISA: keeps control with you, and uses your own £20,000 allowance.

Child Trust Funds

Children born between 1 September 2002 and 2 January 2011 were given a Child Trust Fund with a government voucher. Many are still unclaimed. A Child Trust Fund can be transferred into a Junior ISA, which may offer better rates or lower fees. Young people aged 18 or over can find a lost Child Trust Fund through GOV.UK.

From 16: the child takes control

1. At 16Child can manage the account

   They can choose investments and open their own Junior ISA, but still cannot withdraw.

2. At 18Account becomes an adult ISA

   The money is theirs to keep, invest or spend.

3. From 18Lifetime ISA possible

   Saving for a first home with a 25% government bonus, from 18 to 39.

At 18: the money is theirs

On the 18th birthday the Junior ISA automatically becomes an adult ISA in the young person’s name, still tax-free. Parents have no say in how it is used. Talking about the money early, and what it is for, helps. Some young people move it into a Lifetime ISA, up to £4,000 a year, to get the 25% bonus towards a first home.

Gifts from grandparents

Grandparents can pay straight into a Junior ISA. For inheritance tax, regular gifts out of surplus income are exempt, and anyone can give £3,000 a year plus small gifts of up to £250 per person. Larger gifts are fine too, but count towards the donor’s estate if they die within 7 years. See the inheritance tax calculator.

Choosing a provider

Junior ISAs are offered by banks, building societies, investment platforms and fund managers. When you compare them, look at:

• For cash: the interest rate, whether it is variable, and whether you can pay in by standing order.
• For investments: the platform fee, the fund charges, the minimum monthly payment and the range of funds, especially low-cost index funds.
• For both: whether relatives can pay in easily, for example by a shared payment link, and whether transfers in and out are free.

Many providers let you start with as little as £10 or £25 a month. You can switch provider at any time by asking the new provider to arrange a transfer; do not close the old account yourself, or the money loses its tax-free status.

Choosing investments

For an 18-year horizon, many parents choose a global index tracker fund, which spreads the money across thousands of companies at a low cost. Others use a ready-made multi-asset fund that holds a mix of shares and bonds. Either way, the main risks are short-term falls in value and high charges. Some parents gradually move the money into cash from about age 14 or 15, so a market fall close to 18 does not leave less than was paid in.

Ethical and sustainable funds are widely available if you want the money invested in line with your values, though their charges and returns vary.

Setting a savings goal

It can help to decide what the money is for. University living costs, a first car, a house deposit and travel all need different sums. Work backwards from the goal: the calculator shows what a monthly amount grows to, so try different payments until the value at 18 matches what you hope to give. Remember that the young person will decide how to spend it, so talking about the plan as they grow up matters as much as the number.

Junior ISAs and benefits

Money in a Junior ISA belongs to the child, so it is not counted as the parents’ savings for Universal Credit or other means-tested benefits. It does not affect Child Benefit or Tax-Free Childcare. Once the child is 18 and the account becomes an adult ISA, it counts as their own savings if they claim a means-tested benefit themselves.

Making a family plan

Grandparents and other relatives often want to give money for birthdays and Christmas. Sharing the Junior ISA details, or a payment link if your provider offers one, lets those gifts go straight into the account instead of into a bank account that earns little. Keep a simple note of who has paid in each tax year so the total stays within £9,000. If a relative wants to give more than the allowance, they can save in their own name and pass the money on later, or pay into a Junior SIPP, which has its own limit of £3,600 a year including tax relief.

Keeping track of a Junior ISA

Keep the account details, the provider’s login and annual statements together, along with a note of who has paid in each year. Review the investments once a year: check the fees, the fund performance against similar funds, and whether the mix still suits your child’s age. If you move house, update the provider, because lost accounts are common. Before the 18th birthday, help your child set up their own login so the account passes smoothly to them.

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