Launched in the United Kingdom on 1st November 2011, the Junior ISA is a child-oriented version of the long-standing and popular ISA. It is aimed at parents, guardians and grandparents who wish to save for a child's future. There are some differences, one being the annual contribution, which is £4,080 for the 2016/17 tax year. However, the ISA advantages of no capital gains tax and no further liability to income tax are the same.
Who is eligible?
Junior ISAs are available for any child who is resident in the UK. If the child already has a Child Trust Fund (CTF), they cannot have a Junior ISA as well, but they can have their CTF investment transferred to the newer product.
How much can I invest?
The current annual limit is £4,080. Contributors can either invest lump sums or make regular monthly savings.
To give you an idea as to how much could be saved on behalf of a child, a monthly contribution of £50, assuming 7% growth per annum, could provide a pot of over £21,000 over 18 years. A monthly contribution of £300 could grow to almost £130,000.
For more information, read FundCalibre’s guide to Junior ISAs here.
Unsure where to invest?
The top ten most popular funds for Junior ISAs this year* are:
- Elite Rated CF Woodford Equity Income
- Elite Rated Fundsmith Equity
- AXA Framlington UK Smaller Companies
- Elite Rated Marlborough Special Situations
- Elite Rated Liontrust Special Situations
- Elite Rated Rathbone Global Opportunities
- Elite Rated M&G Global Dividend
- Elite Rated Schroder Asian Income
- Invesco Perpetual High Income
- Elite Rated BlackRock European Dynamic
*Investments made through FundCalibre’s sister company Chelsea Financial Services between 01/01/2016 and 15/02/2016