Junior ISA (Individual Savings Account)

It’s never too early to start investing for your child’s future. If you’re thinking about tax-free savings and investments for a child, a Junior ISA could be an attractive idea with options that may suit you.

Junior ISA has been designed to enable friends, family and loves ones to make long term tax-free investments for a child they care about. Setting some money aside for a child today could help build a useful sum for their future. It could go towards anything from university fees to their first car.

A tax-free investment for children

Scottish Friendly’s Junior ISA invests in stocks and shares and is available for children under 16, who didn’t qualify for a Child Trust Fund (CTF). It is a tax efficient way to save for a child’s future. You can invest in a Junior ISA each year and the money invested could grow over time and be available to the child on their 18th birthday.

Junior ISA is an Individual Savings Account (ISA) – a way of sheltering your investments for children from the taxman, because they don’t have to pay income or capital gains taxes on the proceeds from their investment (other than tax on the dividends from UK shares). Please note that tax treatment depends on individual circumstances and the levels and basis of taxation may change in the future.

Scottish Friendly’s Junior ISA combines the stock market potential with a small amount of reassurance from some secure investments like cash and fixed funds. Our heritage as tax-free investment experts means our investment managers are well placed to provide this ideal balance for your child’s investment. Remember though, the value of these funds can go down as well as up and your original investment is not guaranteed. If you have a Child Trust Fund you cannot currently invest in a Junior ISA for the same child. If this applies to you, then you can pay contributions into their CTF or our Child Flexible Plan may be of interest.

Make the most of their Junior ISA allowance

You’re allowed to invest up to £3,600 in the current tax year in a cash or stocks and shares Junior ISA. This limit is set by the Government. Scottish Friendly’s Junior ISA is a stocks and shares Junior ISA.

You can simply begin by putting away a small amount every month. How much depends on you. The minimum is £10 per month and the maximum is £300 per month with a single ISA manager. Putting money aside for your child could quickly become a habit. When you set up paying into Junior ISA by Direct Debit you may hardly notice the payment.

Or you can pay in lump sums of £50 up to £3,600 each tax year. This is the maximum annual allowance and the limit will be reduced if payments are being made to a Cash Account with another ISA manager in this tax year.

You don't have to maintain monthly payments or make any additional payments if you don't want to; but, as the money is invested in stocks and shares, you should consider this a long-term investment.

We aim to keep costs low. For Junior ISA you’ll only pay an annual management charge of around 1.5%. For details, please see Key Features.

Your choice of investment funds

You can decide whether your Junior ISA money is invested in the Managed Growth Fund or the UK Growth Fund or split it between the two.

The Managed Growth Fund is invested mainly in UK equities and additionally in global equities. An element of security is added by investing a smaller proportion into fixed interest securities such as government bonds. Our investment team uses their expertise to decide which are the best growth opportunities.

The UK Growth Fund gives you good potential for growth from a carefully selected portfolio of leading blue-chip companies. It invests solely in UK equities, although a proportion may be held in cash.

The funds are managed by SVM Asset Management, a firm with many years of experience and headed by Colin McLean, one of the UK's best-known fund managers. However, past performance is not a guide to future performance.

So with the Junior ISA you use the strengths of expert fund managers who aim to profit from the long-term potential of the stock market on your child’s behalf. As you know, the value of these funds can go down as well as up and your original investment is not guaranteed.

Anyone can contribute

Junior ISA can only be set up by a parent or guardian. However, once it has been set up anyone - grandparents, uncles, aunts or family friends - can contribute to a child's Junior ISA as long as the fund selection is made by the parent or guardian and provided that the maximum amount invested does not exceed £3,600 in total in any tax year.

The Junior ISA is the property of the child and only they can access the money in the account. So all payments made into a Junior ISA are considered a gift to the child and cannot be returned. The child can manage the account from age 16 but won’t be able to withdraw money from it until on or after their 18th birthday.

Get your Junior ISA

Opening a Junior ISA with Scottish Friendly is easy.

Make sure you have read and understood the Key Features and Simplified Prospectus before you apply. Then you’re ready to:

• Apply online;
• Or download an application form and post it to:
  Scottish Friendly Assurance, FREEPOST, Glasgow G2 4BR.

If you apply, we suggest printing or saving a copy of this page, other relevant pages, the Key Features and Simplified Prospectus.