Every parent and guardian ultimately wants one thing for their child... fulfilment.
And while money can’t guarantee happiness, it can at least provide a head start when it comes to crossing the all-important threshold into adulthood. This is why many parents choose to open a Junior ISA for their child – because it’s one way of incubating a nest egg to help secure their future.
As Junior ISAs are tax wrappers, they provide a tax-efficient way to save, while locking away the money until the child is old enough to access it themselves.
There are two types of Junior ISA (or JISA, as they’re also known):
- Junior Stocks and Shares ISA
- Junior Cash ISA
Each operates slightly differently, with specific benefits and potential drawbacks, which is why it’s important to understand which type best suits your goals and circumstances. Getting to know them better can help you figure out just that.
Contents:
- What is a Junior Stocks and Shares ISA?
- What is a Junior Junior Cash ISA?
- The key differences between a Junior Cash ISA and a Junior Stocks and Shares ISA
- What type of Junior ISA is suitable for me?
- Can you have more than one Junior ISA?
- What other saving options are available for my child?
- How to set up a Junior ISA
What is a Junior Stocks and Shares ISA?
A Junior Stocks and Shares ISA is an investment account designed to help parents and guardians save for their child’s future, with the added benefit of getting tax-free returns.
Unlike a Cash JISA, where savings grow through interest – (and more on that later!) – a Stocks and Shares JISA allows contributions to be invested in the stock market, which could provide the opportunity for higher growth in the long term.
This is why a Junior Stocks and Shares ISA can be a useful tool for building wealth – especially when they are active for over a decade or more (which they likely will be when opened for a child during their early years).
Still, they do also come with risk.
How does a Junior Stocks and Shares ISA work?
The money you put into a Junior Stocks and Shares ISA is used to purchase different types of investments, such as:
- Shares in companies
- Bonds
- Tracker funds
- Actively managed funds
- Mixed-asset portfolios
Depending on the provider, you may be able to choose your own investments or opt for a managed portfolio (where you pay a fee to have the provider manage investments on your behalf).
Some providers, like us here at Wealthify, also offer ethical investment options – as well as allowing you to select your preferred risk level.
Of course, the ultimate goal is to grow your child’s savings over time through the profits you make from these investments. As with other types of ISAs, any growth on this money is completely tax-free.
Here are some of the benefits associated with a Junior Stocks and Shares ISA:
1. Higher growth potential
JISAs are typically left to mature over a longer period of time as the money cannot be accessed until the registered child turns 18 - meaning there is more potential for growth. In fact, over long time periods, the stock market has historically outperformed the interest gained on cash savings. Over the last 20 years, the annual return of a Stocks and Shares JISA invested entirely in Global Shares would have been 9.64%, compared to Cash at 1.85%. [1]
Please note, this is just an example and not representative of what is held in our own portfolios. Plus, bear in mind past performance is not a reliable indicator of future results.
2. Long-term savings power
Because the money is locked away until your child turns 18, a Stocks and Shares JISA is ideally suited for long-term goals – such as funding higher education, a house deposit, travel, or something else!
3. Tax-free returns
All investment growth within the Junior ISA is exempt from tax. This is because Junior ISAs are “tax wrappers”, which is designed to shelter savings from it.
4. Flexible investment options
You can often choose between different funds to suit your risk appetite, from low-risk mixed-asset funds to higher-risk, higher-reward equity portfolios. You may also be able to opt into ethical investing to stay true to your values whilst growing your money for your little one.
Key information and eligibility
A Junior Stocks and Shares ISA can only be opened by a parent or legal guardian, and the child must be under 18 and a UK resident.
The child cannot have a Child Trust Fund (CTF) at the same time – though CTFs can be transferred to a Junior ISA.
Should you want to, you can transfer a Junior Stocks and Shares ISA to another provider or even switch to a Junior Cash ISA if your priorities change. Remember, though, to always check for exit or transfer fees before making the jump.
How much can you contribute?
The annual contribution limit for {{TaxYear}} is £9,000. And with some providers, like Wealthify, anyone (not just the parents) can contribute to the account – making it a great option for friends and relatives looking to celebrate special occasions or mark key milestones in your child’s life.
Should you decide to open both a Junior Stocks and Shares ISA and a Junior Cash ISA, you can split the annual allowance between both accounts in whichever way you’d like.
When can the child access the money?
Funds are locked away until the child turns 18, at which point the account converts to an adult ISA and they gain full control of the money.
You can find out more about this in our blog: What happens to a Junior ISA at 18?
Risks and considerations
As well as the benefits, you should also take into account the risks and considerations of a Stocks and Shares JISA. These include:
- Market risk. Unlike cash, investments can go up or down in value. There's always a chance that your child could end up with less than you’ve paid in.
- No guaranteed returns. Investment performance is not guaranteed, and past performance doesn’t always indicate future results.
- Volatility. Stock markets can fluctuate significantly, especially over shorter periods. That’s why Stocks and Shares JISAs are best suited for long-term goals where there’s more time to recover from potential market dips.
What is a Junior Cash ISA?
A Junior Cash ISA, like a Junior Stocks and Shares ISA, offers a way for parents to build up tax-free savings for their child, with a cash account coming with the added benefit of being low risk.
A Cash JISA works much like a traditional savings account – your child’s money earns interest over time with the added benefit of a tax wrapper. That’s why Junior Cash ISAs are ideal for parents and guardians looking for a secure way to save, particularly if you want to know your child’s savings won’t fall in value.
How does a Junior Cash ISA work?
When you open a Junior Cash ISA, any money paid in sits as cash and earns interest. The interest rate is set by the provider and may vary.
Once the account is open, some providers offer the ability for anyone to contribute – including grandparents, friends, and other family members – up to the annual tax-free Junior ISA limit. Junior Stocks and Shares ISA combined allowance for the 2025/26 tax year is £9,000 no matter whether you have just a Junior Cash ISA, or a Stocks and Shares Junior ISA, too.
The money is locked away until the child turns 18, which is when they’ll gain full control of the funds. In a nutshell: Junior Cash ISAs provide a way for you to save, earn interest, and establish a lump sum for your child that will become available when they reach adulthood.
Here are some of the benefits associated with a Junior Cash ISA:
1. Capital protection
The biggest advantage of a Junior Cash ISA is security – your child will never receive less than what’s been paid in. This makes it a popular choice for cautious savers.
2. Tax-free savings
Any interest earned within a Junior Cash ISA is completely tax-free, meaning you retain any growth made through interest without having to pay income tax. Normally, if a parent gifts money to their child and the interest earned exceeds £100 in a tax year, that interest is taxed as the parent's income – potentially reducing the overall benefit. However, Junior ISAs are exempt from this rule, meaning all interest earned within the account remains tax-free.
3. Simple and low-maintenance
With a Cash JISA, there’s no need to worry about choosing investments or tracking market performance, just keep in mind that different providers will have different interest rates.You then just choose a provider, open the account, and start saving.
4. Ideal for short- to medium-term savings goals
If you’re planning for something within the next few years – such as education costs when your child turns 18 – a cash JISA provides a predictable and stable way to build those savings.
Key information and eligibility
As with a Junior Stocks and Shares ISA, only a parent or legal guardian with parental responsibility can open an account for a child under 18, and the child must be a UK resident.
All the other rules that go along with a Stocks and Shares JISA apply here, too: A child cannot have a CTF at the same time as a Cash JISA, but a CTF be transferred into a JISA.
As always, keep in mind exit or transfer fees when looking into this.
Risks and considerations
If you’re thinking about opening a Junior Cash ISA for your child, here are some risks and considerations to keep in mind:
- Inflation risk. Although your money won’t decrease in value, its buying power could shrink over time if inflation rises faster than the interest rate you're earning. This means your child could afford less with the money when they turn 18.
- Lower growth potential. Compared to investing in a Stocks and Shares JISA, Cash JISAs usually offer more modest returns. Over long timeframes, the savings may not grow as significantly.
- Interest rates can vary. Different providers offer different interest rates, and they can change over time. That’s why it’s worth shopping around for the best rate and reviewing it regularly.
What are the key differences between a Junior Cash ISA and a Junior Stocks and Shares ISA?
When planning for your child’s future, you want to be very clear on which financial strategy makes sense for you. That’s why we’ve put together a clear comparison table of Stocks and Shares JISAs vs Cash JISAs, so you can see how they stack up.
A side-by-side comparison
What do the stats say?
According to research from Moneyfacts, over a 12-month period (01/02/24 - 01/02/25), on average, Stocks and Shares ISAs outperformed Cash ISAs – delivering an average return of 11.86% compared to 3.80%. [2]
However, when thinking about Junior Cash ISA vs Junior Stocks and Shares ISA, it’s important to remember that returns on Stocks and Shares ISAs can vary widely from year to year, and depend on the level of investment risk selected. Past performance is no guarantee of future results.
What type of Junior ISA is suitable for me?
When comparing adult Cash ISAs and Stocks and Shares ISAs, the decision often comes down to how long you’re planning to save for. Of course, with Junior ISA this is different as that timeline is fixed.
While parents may begin saving at various points in their child’s life, the saving window is still determined by when the child turns 18 (as this is when they can access their JISA, and it becomes an adult ISA).
As most people will aim to open a Junior ISA earlier rather than later, it’s safe to assume that a JISA can generally be regarded as a long-term product by default. That’s why, in many ways, the decision here isn’t about time – but risk.
If you’re comfortable with the idea that investments can go up and down, and you want the potential for stronger long-term returns, then a Junior Stocks and Shares ISA might be right for your child.
If you prefer the peace of mind that comes with knowing your child’s savings are protected from market fluctuations – even if they don’t grow as much – then a Cash JISA may be the better fit.
Some providers (like us here at Wealthify!) offer managed investment portfolios tailored to your comfort level. With different risk styles – ranging from cautious to adventurous – you can choose an approach that matches your mindset.
This means you don’t need to be an expert or take on a daunting amount of risk to open a Junior Stocks and Shares ISA for your child. Instead, you simply pick a risk level that suits your goals and let the experts do the rest.
Can you have more than one Junior ISA?
If you’re feeling torn while considering a Junior Cash ISA vs Stocks and Shares ISA, you’ll be pleased to hear you’re not limited to one kind.
A parent can open a Junior ISA of both types (a Cash ISA and Stocks and Shares ISA) for their child, and these accounts can even be with different providers. It’s important to note, however, that you can’t have two JISAs of the same type with different providers.
Having both account types can be appealing as it allows you to split your child’s savings, and in doing so, pursue two different strategies – guaranteed interest (from Cash), and potential growth (from Stocks and Shares).
How much can be put into a Junior Cash ISA?
Whether you choose a single JISA or both types, the total annual contribution limit remains the same. For the {{TaxYear}}, the Junior ISA allowance is £9,000.
This means if you choose to have both a Cash JISA and a Stocks and Shares JISA, you’ll need to split the allowance between them.
It’s also important to note that a child’s Junior ISA allowance is completely separate from the parent’s personal ISA allowance. So, contributions to your child’s JISA don’t affect your own annual ISA limit.
Can you transfer a Junior ISA to another provider?
Yes, you can transfer a Junior ISA to a different provider, whether it’s a Cash or Stocks and Shares account. This is a great option if you find a provider offering better rates, lower fees, or a more suitable investment strategy for you.
If your child only has a Cash JISA, you are able to transfer it to a Stocks and Shares JISA.
One thing to note is that some providers will only let you transfer the full balance, while others may allow partial transfers.
However, transfers of funds paid into the JISA during the current tax year, or transfers between the same type of JISA, must be completed in full – and partial transfers are only allowed if money paid in during previous tax years is being moved from one type of JISA to another.
Additionally, once both types of JISA are open, you can’t move funds from one to the other (even if with a different provider). So, choose carefully before opening both.
What other saving options are available for my child?
Junior ISAs offer a great way to save tax-efficiently for your child’s future, but they’re not the only route available. Whether you’re looking for more flexibility or a longer-term investment, there are several other savings options to consider.
Traditional child’s saving account
A standard children’s savings account, offered by most banks and building societies, is a simple and accessible alternative to a JISA. This type of account may be ideal if you want the option to access the money before your child turns 18, or you want to teach them basic money management skills early on.
Benefits:
- Easy to open and manage
- Some accounts allow withdrawals before age 18, providing flexibility
- Suitable for short-term savings goals
Drawbacks:
- No tax advantage – unlike Junior ISAs, any interest earned may be taxable =if the child makes more than £100 in interest on money gifted to them by a parent. It’s worth noting, the parent will have to pay tax on all interest if it’s above their own personal savings allowance
- Interest rates may be lower than inflation, meaning savings can lose real term value over time
Junior Self-Invested Personal Pension (SIPP)
For families looking to invest in their child’s very long-term future, a children’s SIPP is another tax-efficient option. It’s a pension product that allows contributions on behalf of a child, with the money locked away until they reach retirement age.
While a Children’s SIPP won’t help your child at 18, it could give them a strong financial foundation later in life.
Benefits:
- Tax relief on contributions: The government adds 20% to whatever you put in, up to £2,880 per year (which becomes £3,600 with tax relief)
- Long-term compounding could lead to significant savings by retirement
Drawbacks:
- No access until at least age 55
- Not suitable for saving for short- or medium-term goals - like university fees or first-home deposits
How to set up a junior ISA
As a parent or legal guardian, you can open one on behalf of your child.
To open a JISA, simply go directly to a provider and decide whether you’re choosing a Stocks and Shares JISA or Cash JISA (or both types, depending on what they offer and what your preferences are). Once the account is open, you can contribute to it, and the money will grow tax-free until your child turns 18 and gains access.
At Wealthify, we offer an award-winning Junior Stocks and Shares ISA, but don’t currently provide a Junior Cash ISA. If you're looking to help your child’s money go further over the long term, our Junior ISA could be a great option.
With Wealthify, your money is managed by our team of experts. With low, transparent fees – more of your child’s money stays invested, and our Ethical option means saving for your child’s future doesn’t need to come at the cost of your values.
Getting started with Wealthify is simple:
- Choose your plan. Select from five investment styles and decide between our Original or Ethical Plan.
- Take our suitability quiz. We use this to help tailor your child’s JISA to your preferences and risk tolerance.
- We handle the rest. Our experts build and manage the investments, keeping them in line with your chosen plan.
- Your child takes over at 18. When they turn 18, the money is theirs to use as they wish – whether for university, travel, or even to be reinvested!
Whether you choose a Junior Cash ISA, a Stocks and Shares JISA, (or a different savings method altogether!), the key is to pick what aligns best with your goals, time frame, and risk comfort.
Your tax treatment will depend on your individual circumstances, and it may be subject to change in the future.
Please remember the value of your investments can go down as well as up, and you could get back less than invested.
Wealthify does not provide financial advice. Please seek financial advice if you are unsure about investing.
References
[1] Bloomberg, Global Shares represented by the MSCI ACWI Net Return Index priced in GBP, Cash represented by the Bank of England Base Rate between 30/06/2005 and 30/06/2025.
