As parents, securing our children’s financial future is a top priority, whether it’s for university, a house deposit, or simply a head start in adult life. When considering tax-efficient savings, two popular options often arise: a Junior ISA (JISA) or saving within an adult ISA held in the parent’s name.
Junior ISA (JISA)
A JISA is designed specifically for children. Contributions grow free from UK income tax and capital gains tax, and the child gains full access to the funds at age 18.
Adult ISA (held by the parent for their child)
Parents can choose to save money for their children within their own adult ISA, managing the funds until they decide to gift them.
Of course, there are advantages and disadvantages to both approaches:
Distinct advantages of a JISA include the money being unequivocally for the child. This fosters financial responsibility since the child legally owns the account and gains access to it at age 18.
Of course this comes with a Loss of Parental Control; parents cannot withdraw the money, and the child gets full control at 18 regardless of their maturity. There is also a lower limit on how much can be saved each year in a JISA.
For those parents who can fully utilise their own ISA allowance, a JISA doesn’t eat into this allowance.
This is by no means exhaustive list and the best choice depends on your comfort with control and your child’s expected maturity.
If you want the money definitively set aside for them from an early age, a JISA may be an excellent solution. If you prefer to retain control over the funds until you deem your child responsible enough, an adult ISA might be more suitable.
Which option aligns better with your family’s financial philosophy?
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Contact: Daniel Sperber at Coleshill Wealth Management
T: 01675 622 445 | daniel@coleshillwealthmanagement.co.uk
The information contained in the blog is for information purposes only and does not constitute advice. Please seek financial advice prior to making any decisions.