A guide to children’s savings accounts

Children’s savings accounts exist in many forms and are designed to give children a financial start in life. They also present an opportunity for parents to teach children the lifelong skill of saving. Basic cash accounts are available from most high street banks and building societies, but it is also possible to hold investments in the name of the child through a Child Trust Fund (CTF) or a Junior Individual Savings Account (JISA).

Child Trust Funds (CTFs)

CTFs were available for children born between 1st September 2002 and 2nd January 2011 as a tax-free savings account. The accounts were opened automatically by the Government, with a one-off £250 or £500 deposit credited on opening. Parents were responsible for the management of the accounts and could also contribute to the account (up to a maximum of £9,000 per annum in 2021/22). The capital was invested in simple investment funds so was exposed to movements in investment markets.

Many CTFs have been forgotten about and it has been claimed that billions of pounds sit in dormant CTF accounts. In September 2020, as the first CTF holders turned 18, HMRC launched a “Find a Child Trust Fund” service. If you, or your child, were born between September 2002 and January 2011 then a CTF should exist. Use the Child Trust Fund service to find out more.

Junior Individual Savings Accounts (JISAs)

The JISA was introduced in January 2011 as the successor of the CTF and is structured like the equivalent ISA account available to adults. JISAs allow tax-efficient savings for children, up to a maximum of £9,000 per annum in 2021/22. Parents can open a cash Junior ISA or a stocks and shares Junior ISA for each child, and contributions can be made by anyone at any point.

At age 16 the child can assume responsibility for the account, but the funds remain locked in until age 18. At age 18 the JISA is converted into an adult ISA. Most Junior ISA providers accept transfers in or out of CTFs, making it easier to consolidate financial products and build JISAs into broader financial plans.

How can Bennett Griffin help?

Child Trust Funds and Junior ISAs can be key components of a wider financial plan and offer a further opportunity to save and invest in a tax-efficient way. Whether you have an existing CTF or JISA which needs reviewing, or you wish to set up a new JISA for your children, we can help.

For further advice please get in touch with a member of our team.

The value of investments can rise and fall, and the value is not guaranteed.