ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

5 Common Myths Surrounding the Junior ISA

Updated on April 16, 2014
Image by Tanyah
Image by Tanyah | Source

The Junior ISA

In the current economic environment it is vitally important that you know how to get the most from your savings and that you fully understand what options are available to you and your family. There has been some confusion surrounding the Junior ISA, which was introduced just over a year ago, and as a result a number of myths about it have developed. The Junior ISA is a tax efficient savings account that parents and other family members can use to save for their children. Parents can open an account on behalf of their child and can pay in up to £3,600 every year. When the child turns 18 the account and the money are passed over to them.

Myth 1: You can never pay in more than £3,600 a year

While it is true that in the year 2011/2012 parents and family members can only pay in £3,600 into a Junior ISA account, this is simply the tax-free threshold. You can pay in more but it would defeat the point of the JISA as a tax-efficient savings account as the extra you paid in would not be tax-free. The maximum limit is also unlikely to stay the same in years to come. The maximum tax-free limit will change in accordance with inflation. This means that the money you put in will not lose any value as inflation rates change. What you can put in one year will still be of equivalent value in the next year.

Myth 2: Your child can have several Junior ISAs

This myth may have developed in relation to adult ISAs. With an ISA you are able to open a number of accounts with different providers. However, this does not apply to the Junior ISA. You can only open one Junior ISA account per child, so you should choose your provider carefully. If you do decide that you do want to change providers you will have to move all the funds in the account across before you will be able to deposit any more money. You are, however, able to open both a Junior ISA account and a Junior Stocks and Shares ISA for your child. This can be a useful thing to do as it means that you can save money in one account and make investments that could make a profit in the other. The maximum limit of £3,600 will still apply; in order for the accounts to be tax-free you cannot deposit more than £3,600 in the accounts in total. Another option for your child is that when they turn 16 they can have a Junior ISA but can also open an adult ISA.

Image by Gerard79
Image by Gerard79 | Source

Myth 3: All children can have a Junior ISA

Unfortunately, if your child was born after 1st of September 2002 but before 1st January 2011 they are not eligible for a Junior ISA. This is down to the fact that in 2005 the government launched a scheme that is similar to the Junior ISA, the Child Trust Fund scheme. If your child was born between these dates they will fall under the CTF scheme and will not be able to open a Junior ISA. Even if you didn’t open a CTF account yourself, your child may still have one in their name as the government automatically opened accounts for a large number of children. This is because the government gave out incentives to try and encourage people to open Child Trust Fund accounts. These incentives were in the form of £250 vouchers that could be invested in CTF accounts. If parents did not invest the voucher into a CTF, the government automatically invested it for them.

Myth 4: You can convert your child’s CTF account into a JISA

Parents may think that they can simply change a CTF account into a JISA but this is not the case. If your child falls under the Child Trust Fund scheme they will not be able to change their account into a Junior ISA. This has caused some frustration amongst parents because the CTF scheme has quickly become outdated with many providers offering better interest rates for the newer Junior ISA option. Many CTFs are languishing and the rates of interest available have not changed with inflation, reducing their value for money.

Image by Lusi
Image by Lusi | Source

Myth 5: Children have to be 18 before they can access their account

This myth is half true. Money cannot be withdrawn from the Junior ISA until your child has turned 18. Once they are 18 years old they will be able to take control of the account and do what they want with the money. Though the child will not be able to make withdrawals before then, they can manage the account and choose how to invest money when they turn 16. Parents and legal guardians can set up a Junior ISA account for a child but grandparents, other family members and family friends can all deposit money in the account. Depositing money into a Junior ISA can be useful for when family members want to give a child money on their birthday or at Christmas.

Comments

Submit a Comment

No comments yet.

working

This website uses cookies

As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://hubpages.com/privacy-policy#gdpr

Show Details
Necessary
HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
LoginThis is necessary to sign in to the HubPages Service.
Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
AkismetThis is used to detect comment spam. (Privacy Policy)
HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
Features
Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
MavenThis supports the Maven widget and search functionality. (Privacy Policy)
Marketing
Google AdSenseThis is an ad network. (Privacy Policy)
Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
Index ExchangeThis is an ad network. (Privacy Policy)
SovrnThis is an ad network. (Privacy Policy)
Facebook AdsThis is an ad network. (Privacy Policy)
Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
AppNexusThis is an ad network. (Privacy Policy)
OpenxThis is an ad network. (Privacy Policy)
Rubicon ProjectThis is an ad network. (Privacy Policy)
TripleLiftThis is an ad network. (Privacy Policy)
Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
Statistics
Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)