ISAs, which are also named Individual Savings Account, are among the most popular kind of funds currently available in the United Kingdom. They have been created to help British Citizens save or invest money according to their preferences and in a tax-efficient way. When depositing money in an ISA, you won’t have to pay any tax on it. UK residents have a wide choice when it comes to choosing the right ISAs for their economic situation: in fact, many types have been created in order to meet the needs of as many people as possible. One of the most popular ISAs is the child’s Junior ISA, which can also be called JISA. It is indeed a special kind of Individual Savings Account designed to help people saving money for their children. In fact, this kind of account can be opened by a parent or by a legal parent to put money aside for their underage children, also in a tax-efficient way. The money you put on this kind of trust can be saved or invested as well, depending on the parent’s preferences. Let’s go deeper into this matter.
How do JISAs work?
Junior ISAs represent a whole new way to save or invest money for underage children while paying no tax at all. As mentioned above, this kind of trust can be opened by parents or legal guardians to save money for their children, which will be given free access to their money as soon as they come of age. When they turn 18, they will be able to withdraw their savings and to use them however they want. In the meantime, you’ll be able to decide whether to just save or start to invest the money you put on the trust. Even though investing may be a solution to make the capital grow, you should consider that you are putting it at constant risk. So, if you choose to invest the money on your children’s trust, bear in mind that the amount they get when they turn 18 will solely depend on how well the investments performed and they could earn less of what you’ve deposited in. Moreover, Junior ISAs come with a restriction on the amount of money you can deposit in a year. If for all regular ISAs this value amounts to £20.000 per tax year, with a JISA you can deposit up to £9.000 per year and about £25 per month. Other family members and friends can also contribute to the children’s pot.
Are there more types of JISAs?
Today, British citizens can choose between two different types of Junior ISAs, which have been specifically designed to meet the needs of as many holders as possible. The Cash Junior ISA is a particular kind of account which resembles a regular savings account. It consists in a fund that can be opened for underage children to save money for their future while never paying any tax on it. On the other hand, Stocks and Shares Junior ISA has been intended for parents or legal guardian who want to put money aside for their children while giving it a chance to grow in a tax efficient way. When depositing funds in a Stocks and Shares Junior ISA, your money will be invested. This could generate an economic growth, but is also very risky. Like any other kind of investment, the risk of not getting how much you hoped is always around the corner. When opening this kind of trust, you should always keep in mind that your children might end up getting less than expected because of the market’s fluctuations.
{ 0 comments… add one now }