A Junior ISA is a tax-free savings or investment account that belongs to a child. In the 2026 to 2027 tax year up to £9,000 can be paid into a child’s Junior ISAs in total, the child can take control of the account at 16 and can withdraw the money at 18, when it becomes an adult ISA (GOV.UK).
The alternatives are a pension for the child, a bare trust or simply saving in a parent’s own name. Each puts the money in different hands at a different age, with different tax rules, so the question to settle first is who should control the money and when.
Junior ISA rules for 2026 to 2027
| Rule | Position in 2026 to 2027 |
|---|---|
| Who can have one | A child under 18 living in the UK (children of Crown servants abroad are an exception) |
| Annual limit | £9,000 in total across cash and stocks and shares Junior ISAs |
| Types | Cash Junior ISA, stocks and shares Junior ISA, or one of each |
| Who opens it | A parent or guardian with parental responsibility |
| Who can pay in | Anyone, within the annual limit |
| Tax | No tax on interest, dividends or capital growth |
| Age 16 | The child can become the registered contact and run the account |
| Age 18 | The child can withdraw the money; the account turns into an adult ISA |
| Child Trust Fund | A child cannot have both; a Child Trust Fund can be transferred into a Junior ISA |
Sources: GOV.UK Junior ISA overview, adding money and managing an account.
The money belongs to the child from the day it goes in. A parent manages it until the child takes over, but cannot take it back out for themselves.
Cash or stocks and shares
Families have been using both. In the 2024 to 2025 tax year around 1.6 million Junior ISAs were paid into, up from 1.37 million the year before, with £2.5 billion subscribed at an average of £1,570 per account; around 38.3% of the money went into cash (HMRC, 16 September 2026).
A cash Junior ISA pays interest and its value does not fall, but over long periods inflation can erode what the money buys. A stocks and shares Junior ISA can hold funds and shares, so its value rises and falls with markets, and the child could get back less than was paid in.
The time horizon is the main difference from adult saving: money paid in for a newborn cannot be withdrawn for 18 years, and the date it becomes available is fixed by the child’s birthday rather than by market conditions. Our explainer on index funds for UK investors covers low-cost tracker funds, which can be held in a stocks and shares Junior ISA, and what to check before buying one.
What happens at 16 and at 18
At 16 the child can become the registered contact for their Junior ISAs (GOV.UK). From then on they can make decisions such as changing provider or switching between cash and stocks and shares, but they still cannot withdraw money.
At 18 the child “can take out any money in their Junior ISAs”, and the accounts “automatically turn into an adult ISA” (GOV.UK). From that point it is their money to spend, save or invest. You must be 18 or over to open an adult ISA (GOV.UK), and in 2026 to 2027 the adult ISA allowance is £20,000. The decision about the 18th birthday is the child’s, not the parent’s, which is one reason families start the money conversation well before it.
Child Trust Funds: check for a forgotten account
Children born between 1 September 2002 and 2 January 2011 were given a Child Trust Fund (CTF). The scheme closed to new accounts in 2011, but existing accounts can still receive up to £9,000 a year, the child can take control at 16 and withdraw at 18, and there is no tax on the income or profits (GOV.UK).
Many have never been claimed. As of 5 April 2026 there were around 2.9 million open CTF accounts, of which around 827,000 had matured and were continuing as CTFs, according to HMRC. The average CTF was worth £2,642 in April 2026. Anyone 16 or over can use HMRC’s free online tool to find their own CTF provider, and parents can use it for a child under 18; you need a National Insurance number and the child’s details (GOV.UK). A child cannot hold a CTF and a Junior ISA at the same time, so families who want one account can ask the CTF provider to transfer it into a Junior ISA (GOV.UK).
Pensions for children
A child can have a personal pension, for example a self-invested personal pension opened by a parent. Someone with no earnings can pay in up to £2,880 a year and the pension provider claims tax relief at 20% for them (GOV.UK). Relief is capped at gross contributions of £3,600 a year for someone with no relevant earnings (Finance Act 2004, section 190), so the provider adds £720 to the £2,880 paid in. Investment income and gains inside a registered pension scheme are not taxed (Finance Act 2004, section 186; Taxation of Chargeable Gains Act 1992, section 271), and tax is paid when money is taken out (GOV.UK).
The trade-off is access. Pension money cannot normally be drawn until the child reaches pension age, decades away, so it will not pay for university, a first car or a house deposit. It is the most locked-away option on this list.
Bare trusts and the £100 rule
A bare trust holds money or investments for a named child, who becomes entitled to the capital and income at 18 in England and Wales, or 16 in Scotland (GOV.UK). Unlike a Junior ISA, a bare trust has no annual subscription limit, but the child gets full control at that age.
The tax rule that catches parents is the parental settlement rule. Income from money a parent gives to their own child under 18, who has never been married or in a civil partnership, is taxed as the parent’s income, unless that income is no more than £100 in the tax year (Income Tax (Trading and Other Income) Act 2005, section 629; GOV.UK). Above £100, the whole amount counts as the parent’s. The rule applies to gifts from a parent; it is framed around “a relevant child of the settlor”, so money from grandparents falls outside it. It does not bite inside a Junior ISA, where interest, dividends and growth are not taxed at all (GOV.UK).
The options side by side
| Option | Whose money | Annual limit, 2026 to 2027 | Child gets access | Tax |
|---|---|---|---|---|
| Junior ISA | Child | £9,000 | Control at 16, withdrawals at 18 | No tax on interest, dividends or growth |
| Child Trust Fund (existing accounts only) | Child | £9,000 | Control at 16, withdrawals at 18 | No tax on income or profits |
| Pension for a child with no earnings | Child | £2,880 paid in, £3,600 with 20% relief | Pension age | Relief on contributions; taxed on the way out |
| Bare trust | Child | None | 18 in England and Wales, 16 in Scotland | Parental gift income over £100 taxed as the parent’s |
| Parent’s own ISA | Parent | Uses the parent’s £20,000 | Whenever the parent decides | No tax for the parent |
Sources: GOV.UK pages on Junior ISAs, Child Trust Funds, pension tax relief, trusts and ISAs, and section 629.
Teaching teenagers about money
Schools cover some of the ground. The national curriculum for citizenship in England includes “the functions and uses of money, the importance and practice of budgeting, and managing risk” at key stage 3, and “income and expenditure, credit and debt, insurance, savings and pensions, financial products and services” at key stage 4 (Department for Education). An account in the child’s own name lets families make those ideas concrete.
- Read a statement together. Find the value, what was paid in and what the account charged. Investment firms that provide an ongoing service must send an annual statement of costs in pounds and as a percentage (FCA Handbook, COBS 6.1ZA.14B).
- Look inside a fund. A factsheet lists the largest holdings and the countries invested in. It turns “the stock market” into named companies the teenager recognises.
- Show a bad year as well as a good one. Values fall as well as rise. Past performance is not a guide to future returns, and seeing that on a statement teaches it better than a lecture.
- Talk about scams before social media does. Show how to check a firm on the FCA’s Warning List and read our guide on how to spot an investment scam.
- Plan the 16 and 18 handovers. Agree in advance what the money is for, because at 18 the decision is legally the young person’s.
For the wider picture on wrappers, see our guide to tax-efficient investing in the UK, and for first steps as an adult investor, how to start investing.
