Earn up to 2.5% with the best Junior Isas for under 18s and discover how to make the most of the tax-free Junior Isa allowance for your child.
What are the best Junior cash Isas rates in 2022?
The Junior Isa allowance in the 2022-23 tax year – beginning 6 April 2021 – is £9,000.
It has remained unchanged since the 2019-20 tax year, when it increased substantially from the previous allowance of £4,368.
Our table outlines the best Junior cash Isas that are currently available, or you can skip to the advice below.
|Darlington BS||Junior||n/a||2.9%||Branch, post||£1|
|Bath BS||Junior||n/a||2.65%||Branch, post||£1|
|Dudley BS||Junior||n/a||2.5%*||Branch, phone, email||£100|
|Family BS||Junior||n/a||2.4%**||Branch, post||£1|
|Coventry BS||Junior||68%||2.35%||Branch, phone, post||£1|
|Tesco Bank||Junior||58%||2.25%||Online, phone||£1|
*for balances of £2,500+.
**for balances of £3,000+.
Rates correct March 2022.
What is a Junior Isa?
A Junior Isa is a child’s version of a tax-free individual savings account (Isa), designed to encourage long-term saving for anyone under the age of 18.
Parents, grandparents and friends can put money into a Junior Isa for a child each year, up to a limit of £9,000 in 2022-23. This limit was £4,368 in 2019-20.
As with standard adult Isas, the money can be invested in cash or stocks and shares, or a mix of the two.
You can only hold one of each type at any one time – one cash Junior Isa and one stocks and shares Junior Isa – but you can switch to a new provider as often as you like.
Who can open a Junior Isa?
Parents and legal guardians can open and manage a Junior Isa for any child under 18.
Parents living abroad can still open an account if they are a Crown servant (e.g. in the UK’s armed forces, diplomatic service or overseas civil service).
Anyone can pay into a Junior Isa (including parents, grandparents and friends) and the accounts are widely available from banks, building societies, credit unions, and stock brokers.
How much is the Junior Isa allowance?
The Junior Isa annual contribution limit for the 2022-23 tax year is £9,000 – this is the maximum that can be paid into a Junior Isa account between 6 April 2022 and 5 April 2023.
You don’t have to pay the maximum contribution – you can deposit anything under this limit. Children aged 16 and 17 can also open an adult cash Isa for themselves.
This means that, during these years, they can benefit from having up to £9,000 deposited into their Junior Isa account, and an additional £20,000 into their adult Isa.
- Find out more: Cash Isa rules and allowances
Who does Junior Isa money belong to?
The parent is responsible for managing the Junior Isa, although the child can take control of the account when they’re 16.
No withdrawals are allowed until they turn 18.
You can’t legally stop your child from spending the money in any way they choose – so bear this in mind when deciding whether to use a Junior Isa, or to save under your own name.
When will my child get access to the money?
Money placed into a Junior Isa will not be able to be accessed until the child turns 18.
After this point, the Junior Isa will be turned into a full adult Isa, and therefore the adult Isa limit of £20,000 will apply.
How many Junior Isa accounts can I open?
You’re only allowed to have one Junior Isa and one Junior stocks and shares Isa.
You can still take advantage and move the money elsewhere if you see a better rate, but the transfer process works differently than with adult Isas.
So, say you’ve saved £6,000 over the past three years into a Junior cash Isa. You’ve found another account that pays a better rate of interest and want to put this year’s Junior Isa allowance into it.
To do this, you’ll have to transfer the whole £6,000 you’ve saved from previous years into the new account you’ve opened, and then deposit the current year’s payments into it.
Should I open a Junior Isa for my child?
Like adults, children have their own tax-free income and allowances.
During 2022-23, both adults and children will only pay tax on their savings interest if their income exceeds £18,570 – made up of the £12,570 personal allowance, £5,000 starting rate for savings and the £1,000 personal savings allowance.
See our guide to tax on children’s savings for further details.
Realistically, most children will never exceed this, so it makes sense to prioritise the best rates, and these may well be found in non-Isa accounts.
That said, there are some important benefits to saving in a Junior Isa:
- The money is locked away until the child turns 18 – although they are free to withdraw and spend the cash on anything they like once they turn 18.
- Junior Isas pay interest and investment returns tax-free: money given by parents that generates more than £100 interest in a year is taxable outside of an Isa.
- There’s a loophole for 16- and 17-year-olds: children can open an adult cash Isa as well as a Junior Isa at age 16, taking advantage of two allowances (but they can only open an adult stocks and shares Isa at 18).
- Junior Isas remain tax-free forever: at 18, the account automatically turns into a normal adult Isa.
What about child trust fund (CTFs)?
Previously, the government gave children at least £250 to open a child trust fund (CTF).
The government automatically opened CTFs for anyone born between 1 September 2002 and 2 January 2011.
Junior Isas replaced CTFs in January 2011.
You can’t have a CTF and a Junior Isa at the same time. But, since April 2015, you can transfer CTF savings to a Junior Isa.
- Find out more: Child trust funds
What are the alternative ways to save for children?
If you’ve used up your child’s tax-free options or you want to access the money before they turn 18, banks and building societies also offer non-Isa savings accounts for children.
Children can open most of these accounts themselves from age seven, so it’s a great way to get them involved.
Watch out for catches such as introductory bonuses, limits on withdrawals, maximum or minimum account balances, and investment charges (if you opt for a stocks and shares Junior Isa).
Providers often offer free gifts such as a piggy bank but don’t be distracted – focus on getting the best return – and check on the progress at least twice a year.
If cash savings are no longer competitive, transfer them to a better account. If stock market investments are underperforming, consider moving.
You could also consider investing in things like premium bonds, traditional investments, or even saving for your child in a pension.