Top junior ISAs

Top junior ISAs
4.95% tax-free kids’ savings

Junior ISAs (JISAs) allow you to save or invest up to £9,000 during the 2024/25 tax year, with funds remaining inaccessible until the child reaches 18. This guide covers the benefits and drawbacks of junior ISAs, the process of transferring from a Child Trust Fund, and highlights the highest interest-paying accounts available.

Top-pick cash junior ISAs

• Top junior cash ISAs
  • Coventry BS – 4.95% (post/branch only)
  • Tesco Bank – 4% (can be opened online)

Top junior ISAs

This guide is the right place to find out how junior ISAs work, how long money’s locked away and today’s top rates.

‘Normal’ kids’ savings

These pay up to 5.8%, typically on smaller amounts. Most accounts give instant access to the savings.

What is a junior ISA?

A junior ISA is a tax-free savings or investment account designed to help families plan for their children’s future. Contributions to a junior ISA are held until the child turns 18, at which point the funds become accessible to them and the account transitions into a standard ISA.

For the 2024/25 tax year, which concludes on Friday, April 5, 2025, you can contribute up to £9,000 into a junior ISA. This £9,000 can be allocated in any combination between the two available types of junior ISAs:

• Junior cash ISAs. This is where you deposit your funds into a straightforward tax-free savings account. Your money is fully protected (as long as it’s with a UK-regulated provider and doesn’t exceed £85,000 with that institution), and you earn a specified amount of interest. The only potential drawback is that your money might not grow as fast as inflation.
• Junior stocks & shares ISAs. Here, returns depend on the performance of the stocks or shares you’ve invested in.

Our guide has full info on what you need to know about junior ISAs, then we have  junior cash ISA best buys.

How do I open a junior ISA?

Most institutions mandate that you apply via mail or visit a local branch, although a few do permit online applications for junior ISAs.

Not every major bank or building society provides junior ISAs. Below, we feature the highest rates in our top picks and explain how to apply. If your child is 16 or 17, they typically have the option to apply for a junior ISA on their own.

When you apply for an account, you may be asked to provide:

• Proof of identity and address for yourself
• Proof of identity for you child
• A linked bank account in your name

The requirements can vary depending on the provider, so make sure to check the terms and conditions.

The nine junior ISA need-to-knows

Everything you need to know about how junior ISAs work…

1 – Your child must be under 18 to have a junior ISA

Any child under 18 is eligible for a junior ISA, but the process to set one up varies based on their birth date.

For children born on or after January 4, 2011, it’s straightforward—simply select a top junior ISA and open it for them, or if they’re aged 16 or 17, they can open it themselves.

Children born before January 3, 2011, would have had a Child Trust Fund (CTF) automatically established by the Government. It’s generally advisable to convert these CTFs into junior ISAs.

In some cases, children born before January 2011 might not have received a CTF (perhaps due to not being UK citizens at the time). If this is the situation, they can now apply for a junior ISA.

Who controls the junior ISA – is it me or my child?

Up until the child turns 16, their parents or legal guardians are fully responsible for contributing funds, selecting providers, and choosing the type of junior ISA (whether cash or shares).

When the child reaches 16, they have the option to manage these decisions themselves if they wish, though the funds remain inaccessible until they turn 18.

An account can be opened by anyone with parental responsibility, typically the parents, but also including grandparents if they are the child’s legal guardians. Additionally, anyone is permitted to deposit money into the account.

2 – For most people junior ISAs AREN’T worth putting new money in unless they pay more than normal kids savings

Junior ISAs once offered a significant advantage by providing tax-free interest on savings. However, their appeal has diminished recently. Nowadays, children are taxed similarly to adults. This means that without any other income, they can earn up to £18,570 annually from savings without incurring taxes. This total comprises the £12,570 personal allowance, the £5,000 starting savings allowance, and the £1,000 personal savings allowance (PSA).

In the rare case that a child does have actual income, the PSA still permits earning up to £1,000 in interest tax-free. However, if they fall into the higher tax bracket, the tax implications could be significantly different.

Generally, under-18s are not subjected to taxes like income tax or capital gains tax, making cash ISAs a more appealing option for some adults.

Today, there are primarily three reasons to consider putting new money into a junior ISA instead of opting for top children’s savings accounts:

– If your goal is to set aside money until they turn 18, a Junior ISA is a straightforward solution, as it ensures the funds are locked away until that age. However, keep in mind that when they reach 18, they gain full control over the money and can use it however they choose.

– Money deposited into a Junior ISA from parents will generate interest exceeding £100 annually. These savings are exempt from taxes and maintain their tax-free status from year to year.

When a child receives money from their parents or step-parents (excluding grandparents, aunts, uncles, etc.), any interest earned above £100 per year from traditional savings accounts (not junior ISAs) will be taxed according to the parent’s income tax rate.

If the child earns more than £100 in interest, the entire amount is taxed at the parent’s rate. However, if the parent’s personal savings allowance (PSA) covers the interest earned by the child, then the interest remains tax-free.

Conversely, if the child exceeds the £100 threshold and the parent has already utilized their PSA, the interest becomes taxable. In such cases, depositing the savings into a junior ISA would be advantageous, as it would ensure the interest remains tax-free. For a more detailed explanation, refer to the guidelines on children’s tax.

– Junior ISAs might offer better interest rates compared to standard savings accounts. Even if the tax benefits for your child are minimal, the higher rate could make a junior ISA a worthwhile option. Therefore, it’s important to compare the rates offered by junior ISAs with those of leading children’s savings accounts.

However, if you’re considering investing in a junior ISA due to its higher rates, keep in mind that the funds will be inaccessible until your child turns 18. Should interest rates on children’s savings accounts rise in the future, you won’t be able to transfer the money out of the junior ISA.

3 – You can convert old child trust funds to junior ISAs

For individuals under 18 who were born before January 2, 2011, a Child Trust Fund (CTF) would have been automatically established by the Government.

If your child has a CTF, you now have the option to transfer it into a junior ISA. This can be especially advantageous for those with a cash CTF, as the interest rates for these accounts have often been less favorable (many banks and building societies have shifted their focus away from CTFs, offering their best rates on newer junior ISAs instead).

This means you can move from outdated accounts to ones with better returns. However, be aware that not all junior ISA providers accept transfers from CTFs, so it’s important to verify this before applying. We’ve listed the providers that do accept CTF transfers in the table below.

To explore all the benefits and drawbacks, refer to the Child Trust Funds guide.

If you’re unsure where your Child Trust Fund is held, you’re not alone—about one million CTFs are believed to be lost. Check out our guide on how to reclaim your lost Child Trust Fund to help locate it.

4 – The money’s locked away until your child’s 18 – and then it’s their cash

Once you deposit money into a junior ISA, it is held until your child turns 18, at which point it becomes their property. Be sure to think carefully about whether you’re comfortable with not having any say in how the funds are used.

This is a crucial factor in deciding where to save. Unlike normal kids savings accounts for children, where you can access the funds at any time (though control generally transfers to the child around age 16), a junior ISA keeps the money entirely out of reach until the child reaches 18. Additionally, you won’t have control over how the money is spent. Keep this in mind…

It’s their money. At age 18, they can do what they want with the cash

Once money is deposited into a junior ISA, it legally becomes the child’s property, not the parents’. Even if you intend for these funds to be used for a home deposit or another specific purpose, you cannot legally prevent the child from using the money for different purposes, such as entertainment. Considering saving the money in your own name might offer more control over its intended use.

What happens to the junior ISA when my child turns 18?

When a child reaches the age of 18, their Junior ISA automatically transitions into a standard adult ISA, maintaining the same allocation between cash and investments as it had before the change.

From this point, the newly-adult account holder can contribute cash up to the current ISA limit, which is £20,000 as of now. These contributions can be allocated among various types of ISAs, including cash ISAs (such as a Help to Buy ISA), stocks and shares ISAs, innovative finance ISAs, and Lifetime ISAs.

The terms of the rolled-over ISA, including interest rates or investment options, are determined by the provider. It’s advisable to review these terms when the rollover occurs, and if the conditions are unfavorable, you have the option to transfer the funds.

To ensure the adult ISA is properly established, the individual should provide their National Insurance number to the bank, enabling them to follow standard ISA setup procedures before the account officially transitions at age 18. See the Cash ISA Guide for full details of how they work.

5 – Should I pick a cash junior ISA or a stocks & shares junior ISA?

Choosing between investing and saving isn’t straightforward, and there isn’t a definitive right or wrong choice; it really depends on your tolerance for risk and your child’s age.

For younger children, investing is generally more advantageous since the stock market typically outperforms savings over extended periods. However, this comes with no guarantees. If your child is nearing 18 and intends to access the funds immediately, the risk associated with market fluctuations increases. In such cases, they might face significant losses if investments have underperformed.

Looking to invest? It’s important to note ExEconomics.com doesn’t cover where you should place your investments – it’s not our field of expertise. Instead, if you’re thinking of investing, these Hargreaves Lansdown and Beanstalk guides may be useful.

6 – If you don’t use your annual junior ISA allowance, you lose it (but you get another allowance next year)

Children have the opportunity to save up to £9,000 annually in a junior ISA for the 2024/25 tax year. The tax year spans from April 6th to April 5th of the following year. It’s crucial to note that any unused allowance or parts of it will be forfeited, as these allowances do not roll over. However, once funds are placed in the junior ISA, they benefit from tax efficiency year after year.

There’s no requirement to fully utilize the junior ISA allowance each year, nor is there a minimum contribution needed to keep the account active. The junior ISA will remain open regardless of whether or not contributions are made.

7 – You can only hold one junior cash ISA and/or one junior stocks & shares ISA at any one time

You have the flexibility to allocate the £9,000 allowance between a junior cash ISA and a junior stocks & shares ISA however you prefer. For example, you could choose to invest £4,500 in a junior cash ISA and £4,500 in a junior stocks & shares ISA within the same tax year, as long as you stay within the £9,000 annual cap. You can switch providers as frequently as you like, but remember that you can only maintain one of each type of ISA at any given time.

If you decide to switch from cash to investments, or the other way around, you can retain the original account, as you’ll still be limited to one of each type. However, if you move funds between different accounts within the same ISA type, the original account will be closed, leaving you with just one active account of that type.

For future tax years, you must either continue contributing to the same account or, if you select a new account, you will need to transfer all previously invested funds into it.

8 – You can transfer cash between junior ISA providers to boost the rate

You have the flexibility to switch between different junior ISA providers whenever you wish. This is particularly important for cash JISAs, where keeping up with the best interest rates requires regular changes.

Additionally, if your saving or investing goals evolve, you can also switch between cash JISAs and stocks & shares JISAs. However, unlike transferring a standard savings account, transferring an ISA involves more technical steps.

To ensure a seamless transfer, just follow our key rule for ISA transfers:

Never withdraw the money yourself if you’re transferring! You’ll immediately lose all the tax benefits.

To initiate a transfer, contact your new provider and complete a transfer form. They will take care of the rest, including reaching out to your current provider and transferring the funds for you.

Keep in mind that with a junior ISA, if you’re moving from one cash JISA to another cash JISA, you must transfer the entire balance from the old account; you cannot split the funds between the old and new providers. This rule also applies to stocks and shares junior ISAs.

On the other hand, it is permissible to hold one cash junior ISA and one stocks and shares junior ISA simultaneously. Therefore, if all of your child’s savings are currently in one type, you can divide the amount and transfer some to the other type of JISA.

When you’re ready to make the transfer, open the new JISA account and provide your new provider with the details of your existing JISA. They will notify your old provider and manage the transfer process on your behalf.

Top junior cash ISAs

Here, we present a selection of the top junior cash ISAs with the highest returns available to everyone. However, it’s a good idea to explore options at your local building society as well, since they might offer exclusive deals for branch visitors. As a national platform, we’re unable to include every localized offer in our overview.

Junior cash ISAs – what we’d go for

Coventry BS pays the top rate at 4.95%, though it can only be opened via post or branch. You can transfer in from existing JISAs, as well as from Child Trust Funds.

For an account you can open and manage online, Tesco Bank and NS&I both pay 4%, so you sacrifice a little on rate for the convenience.

Coventry BS – 4.95% (post/branch only)

Tesco Bank – 4% (can be opened online)

How do I pay into a junior ISA?

Depositing funds into a junior ISA is straightforward and can be done similarly to a standard bank account. You can add money through cash deposits at a branch, by cheque, a one-time bank transfer, or regular payments like a standing order.

You’re free to contribute either a lump sum or make frequent top-ups to your child’s ISA, but be mindful of the annual limit, which is capped at £9,000 per tax year.

Additionally, you have the option to transfer an existing junior ISA to a different provider. Some providers also permit the transfer of Child Trust Funds. Our best buys table indicates which providers offer these transfer options.

What are some alternatives to junior ISAs?

Children’s savings accounts often offer better benefits compared to other options, as they generally provide higher interest rates and are not subject to taxes for most individuals under 18.

These accounts are particularly advantageous if you want your child to have the flexibility to deposit and withdraw funds frequently. In contrast, money in a junior ISA is restricted and cannot be accessed until the child reaches 18.

For additional details, check out our comprehensive guide to kids’ savings accounts. We highlight our top recommendations for easy-access accounts, which allow for unrestricted deposits and withdrawals, as well as normal savings accounts designed for monthly contributions.

Want to complain about your savings provider?

If your savings provider has given you the incorrect interest rate, or you haven’t received your interest at all, then you don’t have to suffer in silence.

It’s always worth trying to call your provider first to see if it can help, but if not, you can use free complaints tool Resolver. The tool helps you manage your complaint, and if the company doesn’t play ball, it also helps you escalate your complaint to the free Financial Ombudsman Service.