Whether it’s for good grades, regular pocket money, birthday cash, or using your own annual gift allowance; there’s a range of reasons why grandparents would want to lean into using a tax-efficient Junior ISA when saving for their grandchildren. Here’s what you need to know about who can open one and how to contribute:
- Can grandparents open a Junior ISA?
- Can grandparents pay into a Junior ISA?
- Who can withdraw money from a Junior ISA?
- How to open a Wealthify Junior ISA
Can grandparents open a Junior ISA?
Unless they are also the legal guardian with parental responsibility, grandparents can’t open a Junior ISA on behalf of their grandchild. But that isn’t to say grandparents can’t contribute to their grandchild’s financial future.
After all, it’s completely understandable that you’d want to ensure they’re financially protected and prepared for adult life.
From gifting larger sums to giving regular pocket money, it makes sense to do this with a tax-efficient account like a Junior ISA.
Traditional children’s savings accounts are on offer, too, although they may come with fees or likely be without the tax-free benefits a Junior ISA.
Either way, it’s only the setting up of the Junior ISA that requires parental control — after that, there are ways to contribute to your grandchild’s savings.
Tax treatment will depend on individual circumstances, and it may be subject to change in the future.
Who can open a Junior ISA
Only a parent or legal guardian can open the Junior ISA to get things started. And even then, there will only be one parent/guardian who is managing the account on the child’s behalf, until they are between 16 to 18 years old. At 16, the child could take over management if they want to, although they won’t be able to withdraw until 18.
If you’d like to propose the idea of their parent/guardian opening the Junior ISA so that you can contribute, here’s the eligibility for you to share to help them make an informed choice:
- The child needs to be under 18 (adult grandchildren can open a standard adult ISA once they are 18 or older).
- The account can’t be opened until they are born (as exciting as it is to have a new bundle of joy scheduled to arrive).
- The child must be a UK resident.
- They must have been born on or after 3rd January 2011.
- If they already have a Child Trust Fund, this would need to be transferred over to a Junior ISA first. (Children can only have one or the other, not both open at the same time, but the transfer process is straightforward).
Can grandparents pay into a Junior ISA?
As long as the Junior ISA provider offers this as a service, then yes.
Wealthify, for example, offers a simple Contributor option for our Junior ISA: letting grandparents such as yourself, aunties, uncles, godparents, family friends, and even kindly neighbours join in with filling up the child’s money jar.
There are no additional fees for adding Contributors to the account. All that needs to happen is for the person managing the account to simply invite you to contribute once the account is set up.
Junior ISA maximum contribution
Whether it comes all from a grandparent’s contribution, or the whole village that’s helping the child build their Junior ISA, there is a maximum amount that can be deposited in any given tax year. That allowance currently stands at £9,000 (although could be subject to change in future tax years).
If your family is using Wealthify’s Junior Stocks and Shares ISA, Contributors can visit the online dashboard to see how much you’ve contributed so far, and how much of the child’s ISA allowance is remaining before it resets on 6th April.
The only thing to be mindful of is that if your grandchild has a Junior Cash ISA with another provider, the parent/guardian managing that account would need to keep you informed of how much of an allowance is left on that account, too. (It’s a combined allowance of £9,000 across both a Junior Cash ISA and a Junior Stocks and Shares ISA per tax year.)
Who can withdraw money from a Junior Cash ISA?
Nobody can withdraw from the Junior ISA aside from the child (after they turn 18) — not even the parent managing the account for them.
The money held in the Junior ISA belongs to the child only, and it’s locked away until that point.
As mentioned briefly above, when your grandchild turns 16, some providers allow them to take over the management of the account — if they want to and feel ready. However, they still won’t be able to withdraw from it until they’re 18. At Wealthify, we only allow the child to take control of the account once they turn 18 and the ISA matures.
Their 18th birthday isn’t just going to be about cake and candles: it’ll also be the point at which their Junior ISA matures into an adult version of an ISA, automatically. Typically, it’ll either be a Stocks and Shares ISA or a Cash ISA; this will be down to the provider and their policy.
For example, Wealthify’s Junior ISA (being a Stocks and Shares version), becomes an adult Stocks and Shares ISA. That way, your grandchild can continue to invest and build on the family’s contributions, if that’s how they wish to manage their money.
How to open a Wealthify Junior ISA
If your family are considering a Wealthify Junior ISA, you wouldn’t be alone! We understand that investing in a financial future for your family is what counts. Our popular Junior Stocks and Shares ISA will unlock a tax-free opportunity for building their wealth.
- We’ve won ‘Best Junior ISA Provider’ for six years in a row at the Personal Finance Awards.
- We have a popular Ethical Investing Plan for those considering their children’s future in more ways than one.
- Our expert Investment Team will manage the account over the years: leave it with us, while you spend time making memories.
Remember, while opening the account may need help from the child’s parent/legal guardian, it’s a quick and easy progress. And once it’s set up, who can pay into a Junior ISA? Well with Wealthify, anyone who’s invited to!
With a Junior ISA, capital is at risk and the child could get back less than invested.
Tax treatment will depend on individual circumstances, and it may be subject to change in the future.
Wealthify does not provide financial advice. Please seek financial advice if you are unsure about investing.
Resources:
