ALL MATTERS FINANCIAL

A guide to Junior ISA savings accounts

Junior ISAs are tax-free savings accounts.

Up to £4,080 can be saved or invested in this tax year, providing your child is under 18 and lives in the UK.

Your child can have one or both types of Junior ISAs:

–  A cash Junior ISA

–  A stocks and shares Junior ISA

Both are tax-free until your child’s 18th birthday, when the Junior ISA will become an adult ISA.

For the cash Junior ISA you won’t pay tax on interest on the cash saved.

With a stocks and shares Junior ISA you won’t pay tax on any capital growth or dividends you receive.

Remember, parents or guardians with parental responsibility can open a Junior ISA and manage the account. However, the money belongs to the child and they can take control of the account once they’ve turned 16. Full control comes when they’re 18 years old, which signals the point when they can withdraw money.

First though, you’ll need to choose the type of Junior ISA you want for your child. After you’ve chosen an account provider it will then be a case of filling out and submitting a relevant application form.

At Pareto FP, experts can help you select the most appropriate account following thorough research tailored around your needs.

Banks, credit unions, stock brokers and building societies are more often than not the best places to shop around.

When the account is up and running, anyone can pay into a Junior ISA. The total amount however, cannot exceed £4,080 in the 2015 to 2016 tax year.

If £3,000 has paid into your child’s Junior ISA – only £1,080 could then be paid into your child’s stocks and shares Junior ISA in the same tax year.

At Pareto FP, the team focus on the bigger picture too. We like to talk you through the best options. In this case, we know that the cost of raising a child is only going one way.

It’s so easy, especially given how fast the world works in the current digital age, to neglect saving for your child’s future.

That’s why we provide advice on matters like finding the most suitable Junior ISA.

Pareto FP understand that parents won’t want to rush any decision, given its importance.

But it’s been proven that it really does pay to research your children’s financial future. Again, that’s where Pareto FP comes in.

Like anything, it’s about assessing the potential options and then putting a plan in place. A lot of the time, parents fall for the wrong Junior ISA. With Pareto FP’s help, saving for your children becomes much easier.

The parent who opens the account will be the ‘registered contact’ and can therefore:

–          Change details like address for example

–          Change the account from a stocks and shares Junior ISA to a Junior ISA

–          And also change the account provider

Just to reiterate, once your child is 16 or above, they can become the ‘registered contact’ and also open an adult cash ISA.

If you’re looking for help on saving for your children, or any aspect of financial planning – do get in touch with Pareto FP.