Compare junior ISA and Junior stocks and shares ISA

Find a junior stocks and shares ISA or a junior cash ISA that offers the potential to earn a high tax free return on your investment for your child's future.

Investment ISAs put your capital at risk, and you may get back less than you originally invested.

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Last updated: 6 April, 2021

How to find the best Junior ISA 

The best Junior ISA is the one that’s most suitable for your financial goals. Everyone has different needs, so the best Junior ISA for you may not be ideal for someone else.

Our comparison will help you to find the best Junior ISA for your situation.

What’s a Junior Cash ISA and a Junior Stocks and Shares ISA?

A Junior Cash ISA and Junior Stocks and Shares ISA are both tax-free ways for parents to invest money for their children's future. Money you add into them is locked away until your child's 18th birthday, after which it becomes a standard ISA.

But the two types of Junior ISA are quite different:

  • Junior Stocks and Shares ISA: Invest your child's money in a Junior Stocks and Shares ISA. This offers the potential for a greater return, but your child's money could also fall in value, so there is some risk attached.

  • Junior cash ISA: These are cash-based deposit savings accounts. Any money you save for your child is protected against dropping in value.

They’re designed to encourage families to save for their children’s futures.

Which is the best Child ISA in terms of return on investment?

Choosing the best Child ISA can be tricky, as the two types work so differently. There’s no right or wrong when it comes to picking. It’s a matter of preference.

  • A Junior Stocks and Shares ISA doesn’t offer variable or fixed interest rates. Instead, it offers you a return based on current stock market performance.

  • A Junior cash ISA offers variable interest rates. Your child's money will always grow in value as long as the interest rate’s above 0%.

If you’re unsure of which is the best Child ISA for your little one, then get advice from an independent financial adviser.

Find out more about savings interest here.

How to get the best Junior ISA rates

Getting the best Junior ISA rates will depend on you choosing the right type of account and making the right decision for you.

Technically, a Juniors Stocks and Shares ISA isn’t based on ‘rates’, but instead on the return you get from your investment. Remember that if you decide to invest in a Juniors Stocks and Shares ISA, your experience and knowledge of the stock market should be a factor. 

If you don't know how to pick the right funds to invest your Juniors Stocks and Shares ISA in, then you might want to consider using an investment fund. These are operated by a fund manager, who pools your money in with other investors' money, and controls where it's invested. If your understanding of the stock market is limited, this is the best way of running a Juniors Stocks and Shares ISA.

If you want a Junior Cash ISA, then finding the best Junior ISA rates will be easier as we have a handy comparison. You can compare Junior Cash ISAs and other types of savings accounts for children here.

Find out more about Junior Cash ISAs here.

Once I’ve decided on the best Junior ISA, where can I open one?

Congratulations on choosing the best Junior ISA for your needs. The next step is to open one. The process is slightly different depending on which you’ve decided is the best Junior ISA for you.

  • A Junior Stocks and Shares ISA is available through an investment manager. You may need to get advice before you’re able to open it on behalf of your child.

  • A Junior Cash ISA can be opened in banks and building societies. You don’t have to speak with an adviser to open one.

Whichever is the best Junior ISA for you, there may also be an option to open it online. You could make a lump sum payment or save throughout the tax year, as long as you don’t exceed your child's junior ISA allowance.

If your child was born before 1 January 2011, the situation is slightly different. They will have a Child Trust Fund that was opened for them by the Government, and this can be converted to a Junior ISA.

How much can you pay into a Junior Cash ISA or Junior Stocks and Shares ISA?

Your child has Junior ISA Allowance of £9,000 which can be used during the 2020/22 tax year. That’s the maximum amount that can be put in to their ISA across the tax year. The allowance is reviewed annually by the Government.

You can use all of this allowance in a Junior Cash ISA or Junior Stocks and Shares ISA, or split the £9,000 between the two. 

You don’t have to put the full amount in – the £9,000 is just a maximum. But remember that if you don’t use your allowance, it doesn’t roll over to the next year. You just lose it, unless you put it into an ISA.

You can only pay into one Junior Cash ISA or Junior Stocks and Shares ISA during each tax year. And you can only have one of each type at any one time. Find out more about how they work here.

What if my child’s ISA is no longer the best Junior ISA available?

If you opened what was the best Junior ISA at the time, but it’s no longer the best one available, then don’t panic. You can switch between Junior ISA providers. You can even switch between ISA types if you want – from a Junior Cash ISA to a Junior Stocks and Shares ISA – and vice versa.

The important thing to remember if you switch ISAs is that you mustn’t withdraw the cash yourself. You’ll use the tax benefits if you do. Leave it to the providers to sort out for you.

Do I manage my child’s Junior Cash ISA or Junior Stocks and Shares ISA on their behalf?

You’ll have to manage it until your child is 16. You’ll choose the ISA, open it, pay in money and choose the providers. But once they’ve turned 16, they’ll have the chance to take charge. They can’t withdraw any funds until they’re 18 though. At that point, they can do whatever they choose with the money.

It’s down to the parent – or person with parental responsibility – to open the account, but anyone can put money in.

Junior ISA FAQs

You can only open and pay into one junior cash ISA and one junior stocks and shares ISA.

Junior cash ISAs are safe but money invested in a junior stocks and shares ISA is linked to the stock market, so could go up or down in value.

No, the account is not accessible until your child turns 18, when the account is turned into an instant access ISA in their name.

Up to your child's ISA allowance of £4,260 each tax year.

No, you can only open a junior ISA on behalf of one child.

No, only the parent or legal guardian of a child can open a junior ISA on their behalf.

About our junior ISA savings and investments comparison

Our comparison tables include providers we have commercial arrangements with. The number of listings in our tables can vary depending on the terms of those arrangements, as well as other market developments. They are all from lenders regulated by the Financial Conduct Authority (FCA).

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We have commercial agreements with some of the companies in this comparison and get paid commission if we help you take out one of their products or services. Find out more here.

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