How grandparents, aunts, uncles and family friends can give money to a child via a Junior ISA

Investing in a child’s future can be a rewarding gift for them and for you. Using a Junior ISA is a tax-efficient way of letting that money grow, and knowing your money could help them get ahead is deeply satisfying on a personal level.

Relatives or friends often give a child a toy or clothes for their birthday or at Christmas, or they donate cash that is often frittered away on things that only provide short-term joy. Gifting money into a Junior ISA can provide longer-lasting benefits.

Whether you’re a parent, grandparent, aunt, uncle, cousin or just a family friend, it’s easy to transfer money into a Junior ISA. Read on to discover how to do it.

How much can you invest in a Junior ISA?

Up to £9,000 can be invested each year in a Junior ISA up to the child’s 18th birthday, when they will be given the option to convert it into an adult ISA or withdraw a lump sum.

Some people worry about giving their child the option to take so much money at what could be an impressionable age, but many young adults decide to continue with the savings habit.

Who sets up a Junior ISA account?

A Junior ISA must be set up by the parent or guardian of the child – the ‘registered contact’. While a grandparent, aunt, uncle, cousin or family friend cannot set up the account, there is nothing stopping them from paying into it directly.

The £9,000 subscription limit is completely unaffected by any other ISA payments the parent or others are making into other accounts – so they could pay £20,000 into their own ISA and £9,000 into the child’s Junior ISA.

Until the child’s 18th birthday, generally no withdrawals can be made from the Junior ISA account. Transfers in and out of the Junior ISA can only be made from and to another Junior ISA.

How do you make one-off payments into a Junior ISA?

A parent or guardian manages the Junior ISA until the child turns 16, and they can link their own bank account to the ISA to make contributions or set up a direct debit for regular payments.

Rather than pay money to the parent or guardian and get them to forward it on to the child’s account, a grandparent, aunt, uncle, cousin or family friend can make contributions directly. That makes life a lot easier for everyone involved.

The parent or guardian responsible for managing the Junior ISA account needs to log in and click on ‘Single payment’. From this screen, they can create a link that can be emailed to relatives or friends, letting them pay directly into the Junior ISA. They’ll need to confirm the child’s surname and date of birth to make the payment.

Can a child have two types of Junior ISA?

The Junior ISA account can be either a cash ISA or an investment (stocks and shares) ISA. A child could have one of each type – one cash and one investment Junior ISA. But their £9,000 subscription allowance is shared across the two accounts. AJ Bell only offers an investment Junior ISA.

The child can only ever have one cash Junior ISA and/or one investment Junior ISA. If the parent or guardian wants to change provider, they must transfer the current Junior ISA to a new Junior ISA with the new provider; they couldn’t just set up another one and leave the old one behind.

A child who is aged 16 or over could previously also take out their own adult cash ISA. This meant that £20,000 could be paid into the adult cash ISA and £9,000 into the Junior ISA for the two tax years a until the child turned 18.

The rules changed on 6 April 2024 whereby the minimum age to open an adult cash ISA is now 18 years old, to match the adult investment ISA age.

There is still an exception to the rule. If the child was 16 or 17 on 6 April 2024, and they don’t currently have an adult cash ISA, then they can still take out a single adult cash ISA. Anyone aged 16 or 17 who already has an adult cash ISA can continue to pay into it. So, for these individuals, a total of £29,000 can continue to be paid into their ISA savings this tax year.