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Can a grandparent open a Junior ISA?


The short answer is, to open a Junior ISA, you must be the legal guardian of the minor associated with the ISA. That said, there are still ways that you, as a grandparent or friend can contribute to it. Junior ISAs are a good way of helping the young person in your life to gain financial stability once they come of age, helping to take some of the financial burden off of tuition fees or when making the deposit on their first property – Junior ISAs is one of the best kids investments that families can set up for their children, since they help to give them a head start in building their wealth and financial future in a way that is tax efficient.

Once the child turns 18, they are able to access the funds in their Junior ISA account, and the funds in their ISA account will automatically be transferred into an adult ISA account. ISA transfers, of course, are no surprise — the child and co-titleholders are always notified of the change well beforehand, so they can choose to continue to keep the money in an ISA or to spend it. The parent or legal guardian of the child can also make an ISA transfer if they are unsatisfied with the way the account is managed, or if you need to transfer from a Child Trust Fund (CTF) that had already been opened to a Junior ISA. Child Trust Funds have since been replaced by Junior ISAs, so it’s no longer possible to open one, but if your young person has a a CTF, you can transfer the funds from your CTF to a Junior ISA, though you should consult your financial advisor to weigh the benefits between the child trust fund vs junior ISA.

A Junior ISA is a great tool to help secure the financial future of the young person in your life – setting aside a tantum on which they can build their savings and develop their saving habits once they get closer to adulthood. Since they are tax efficient, Junior ISAs can be a strategic financial planning tool to pass down wealth to a younger generation, but you should speak with a financial advisor before making any decisions.

Cash-based Junior ISA savings account are a tried and trusted option for accumulating and passing down wealth to the next generation, but there’s always a risk that the Junior ISA interest rates aren’t able to keep pace with rising inflation, especially in today’s day and age. That means that in the future, once the child is able to access the money in the savings, they may not be able to buy as much with the earnings.

That’s why a Stock & Shares Junior ISA may be a better option for the child, since the value of the stocks adjust according to inflation. Though stocks and shares accounts are subject to other risks, they typically outperform cash-based accounts in the long term. 

Can a grandparent open a Junior ISA?: Summary table

👴🏻 Can a grandparent open a Junior ISA?Anyone is able to pay money into the account. The only information necessary to pay into the account is the account number, and the child’s date of birth.
❓Can I pay into my grandchild’s Junior ISA?Investing in commodity ETFs like silver provide for portfolio diversification that is resistant to the corrosive effects of inflation and other types of market volatility
🤔 How can I pay into my grandchild’s Junior ISA?You can make a bank transfer, standing order, direct debit or write out a cheque to the account number and account holder

Can a grandparent open a Junior ISA for their grandchild?

Only the child’s legal guardian is able to open a Junior ISA for them. Nonetheless, grandparents saving for grandchildren is still an option! Grandparents are still able to make contributions to their grandchild’s ISA account by paying into an account that has already been set up by the child’s legal guardian. Anyone can pay money into a Junior ISA, either through lump sum or regular contributions, but the total amount that can be paid into the account in the 2021 to 2022 tax year cannot exceed £9,000. 

While there are other types of child savings accounts that you can open for the young person in your life to start generating interest on the money that you set aside for them, these do not typically perform as well as Junior ISAs. Better still are the Stock & Shares Junior ISAs that give the child’s money a more significant opportunity to grow over time.

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Who can pay into a Junior ISA?

Once the parent or legal guardian has set up a Junior ISA for the child, anyone is able to pay money into the account. The only information that you need to be able to pay into the account is the account number, and the child’s date of birth. So if you are a grandparent and you want to pay into the Junior ISA account of your grandchildren, it’s easy to do so – just ask for the account number (since we know you already remember the birthdays of your grandchildren by heart).

How can a grandparent pay into a Junior ISA?

Once you’ve received the account number of the Junior ISA account that you want to pay into, you can make a bank transfer, standing order, direct debit or write out a cheque to the account number and account holder. The only thing to keep in mind is that there is a legal limit to the total amount of money that can be paid into the account in the course of the year. 

However, as with all ISAs, there is an annual allowance for Junior ISAs that may not be exceeded. For the 2021-2022 tax year, the Junior ISA account may receive a maximum of £9,000. That means you will need to coordinate between yourself and others for payments to be made into the account, so that you can make the most of the Junior ISA allowance are sure not to exceed the limit.

FAQ

What is the annual allowance of a Junior ISA?

For the 2021-2022 tax year, the Junior ISA account may receive a maximum of £9,000.

What is the best kind of Junior ISA to open?

Cash-based Junior ISA savings account are good option for accumulating and passing down wealth to the next generation in a tax efficient way, though Stocks & Shares Junior ISA is also an option.

When can my grandchild access the money in the Junior ISA?

Once the child turns 18, they are able to access the funds in their Junior ISA account, and the funds in their ISA account will automatically be transferred into an adult ISA account.

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