Becoming an adult means embracing new freedoms and new responsibilities as your child reaches adulthood.
Naturally, when a child comes of age, their JISA also matures — but what exactly does that entail? Let’s take a look what happens to a Junior ISA at 18.
- What is a matured Junior ISA ?
- Withdrawing from the account
- Can I close a matured Junior ISA?
- Can you access a Junior ISA before 18?
- Wealthify Junior ISA
What is a matured Junior ISA ?
A matured Junior ISA is effectively an ‘adult’ ISA. In real terms, this means the JISA (now, a matured ISA) is no longer managed by a parent or legal guardian (be that a grandparent, foster parent, or anyone with legal parental responsibility).
The parent or guardian (known as the ‘registered contact’) will no longer have access to the Junior ISA; instead, it passes over to the child it was set up for.
When does a Junior ISA mature
Just like so many other milestones that go along with this big birthday, 18 is the age when a Junior ISA matures into an adult ISA.
That means the child the Junior ISA was set up for will take charge of the account on their 18th birthday.
What happens when a Junior ISA matures
Ok, so, what next? You’ll probably wonder what the Junior ISA maturity options are, and what you need to do to access them.
Once the child has turned 18, the Junior ISA maturation process will be automatically initiated by your provider.
Usually, this begins with the provider contacting the child named on the Junior ISA account. This is to confirm up-to-date contact information for the child now that they’re an adult, and provide them with further guidance on what happens next. Of course, all providers handle things slightly differently and you may need to contact or check in with your own provider for confirmation on their exact maturation process.
Generally, this is how the Junior ISA automatically “matures” into an adult ISA.
After that, the ISA will officially be classed as an adult ISA and depending on the provider and ISA type, function in the same way as a standard Stocks & Shares ISA or Cash ISA.
From this point onwards, the ISA now belongs to the 18-year-old. It’s up to them whether they decide to transfer the ISA, withdraw from it, or simply continue to build on the funds they already have.
Junior ISA withdrawals
Reaching a long-term goal is often equal parts exciting and daunting. Once a Junior ISA has matured (or is on the cusp of maturing), thoughts naturally turn to withdrawals and what the money might be used for.
Of course, anyone opening a Junior ISA on behalf of a child will have had a few ideas about what that money might be put towards.
Perhaps these goals include further education, the freedom to travel, or money for/towards high-value purchases, such as a car or house.
As we’ve covered, a matured Junior ISA automatically transfers to the child named on the account. That’s why a conversation around what they might do with their ISA can help them make informed decisions before reaching that milestone.
Research from MyBnk and Compare the Market found that only 2/5 of young adults are financially literate, with 61% reporting that they do not recall receiving financial education at school [2].
A lot can be learned and dispelled through open conversation.
That’s why a chat about future withdrawals from the JISA once it has matured – and the possible use of this money – can encourage financial literacy and strategic next steps before Junior ISA maturation.
Can you withdraw from a Junior ISA early?
As we’ve mentioned, a Junior ISA doesn’t mature until the named child turns 18. But can you withdraw from a Junior ISA early? The short answer is no.
A key feature of Junior ISAs is that money cannot be withdrawn until the child turns 18. The funds are locked away and inaccessible up to this point, other than in exceptional circumstances (more on that below).
Can parents withdraw money from a Junior ISA?
It’s not uncommon to wonder “can parents withdraw money from a Junior ISA?”
Because parents are generally the ones who establish and pay into an account for a child, you might assume they can withdraw from that same Junior ISA if needed.
However, this is not the case.
The Junior ISA belongs to the child it was set up for, which is why it can only be accessed by them once they’ve reached adulthood.
The only exception comes in the form of serious illness or death.
If a child with a Junior ISA becomes terminally ill or passes away, a parent may then be able to withdraw from their account.
In England and Wales, a parent has six months from the date of a child’s diagnosis to withdraw money from their Junior ISA. In Northern Ireland, this period is extended to 12 months and, in Scotland, a parent may withdraw funds at any point after the child is first diagnosed.
For parents or guardians in this situation, the first step to accessing the funds is to inform HMRC by letting them know about the illness. They can then also inform them that they plan to withdraw from the child’s Junior ISA.
In the case of death, any funds in a Junior ISA will be paid to the person who will be inheriting the child’s estate. You can find more information about this on the government’s website.
Can I close a matured Junior ISA?
Well, now you know what happens when a Junior ISA matures. But you might still be curious about next steps in terms of closing a matured Junior ISA, right?
It’s important to understand that parents and/or legal guardians lose access to a Junior ISA when the child turns 18, and this is irreversible (except in the circumstances mentioned above).
This means that the Junior ISA – which automatically becomes an adult ISA when the child turns 18 – is completely managed by this child once they are of age. In a sense, the Junior ISA has “closed”, because it now functions as a standard ISA, with no manual closing of the Junior ISA required.
In summary, closing the matured ISA after this point will fall to the adult owner of the account, if this is what they want.
Can you access a Junior ISA before 18?
The Junior ISA maturation process automatically comes into effect when a child becomes an adult.
But that doesn’t mean the child is entirely barred from accessing it earlier.
The person who opens the Junior ISA account is known as the ‘registered contact’ (usually a parent or guardian).
The registered contact is the one who manages the account. This may involve things such as:
- Transferring the Junior ISA to a new provider.
- Changing the ISA type.
- Updating personal details as needed.
When the child named on the account turns 16, some providers allow them to take over as the registered contact for the Junior ISA. This can also work the other way with the parent or guardian deciding to pass on responsibility to the child. If this occurs, the child will have the right to access and manage all the elements mentioned above.
If they don’t feel ready to do this at that age, they can let their parent/guardian continue to manage things for them for a couple more years.
Either way, the child will still need to wait until they turn 18 to actually withdraw and use the money.
Wealthify Junior ISA
If you’re thinking about setting up a Junior ISA, don’t forget to check out Wealthify’s award-winning Junior Stocks and Shares ISA. It offers a great way to start building towards your child’s future, with more of your child’s money remaining invested thanks to our low, transparent fees.
Still on the fence about whether a Junior ISA is the right option for your child?
Don’t forget to check out our blog on the pros and cons of opening a Junior ISA, so you can figure out what makes sense for you and your child.
With investing, your capital is at risk. Please remember the value of your investments can go down as well as up, and you could get back less than invested.
Wealthify does not provide financial advice. Please seek financial advice if you are unsure about investing.
Your tax treatment will depend on your individual circumstances, and it may be subject to change in the future.
References:
[1] https://www.lfbf.org.uk/research-report/the-young-persons-money-index-2023-24/
[2] https://www.mybnk.org/report-on-financial-education-in-schools/
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