Saving money for a child is one way families may choose to support their future. It can be an important part of planning for their future, and grandparents may choose to support their grandchildren by setting money aside. A Junior ISA (JISA) is an option for doing so, but the rules around opening and contributing to a JISA aren’t always clear, particularly if you’re not the child’s parent.
In this guide, we'll explain whether a grandparent can open a Junior ISA, who is allowed to set one up, and how grandparents can contribute to a grandchild’s future once an account is open. We’ll also explain ownership of the money in a JISA, access rules, and some key points to be aware of before deciding how to save or invest on a child’s behalf.
This information is for general guidance only and does not constitute personal financial advice. Whether a Junior ISA is suitable depends on your child’s individual circumstances. Tax treatment depends on individual circumstances and tax rules may be subject to change in the future.
What is a Junior ISA?
A Junior ISA is a type of savings or investment account introduced by the UK Government to help families put money aside for children who are UK-based and under 18.
JISAs are designed to be tax efficient, meaning any interest, income, or investment growth held within the account is free from tax up to the annual allowance of £9,000 per child.
Junior ISAs are free from income tax, capital gains tax, and tax on UK dividends, allowing the child to keep all interest and any potential investment profits earned in the account.
Junior ISAs replaced the former Child Trust Fund (CTF) scheme as a way to save or invest for a child's future, although some children may still have an existing CTF. Money paid into a Junior ISA belongs to the child and is locked away until they turn 18, at which point they can access the funds themselves.
Although Junior ISAs can benefit from tax advantages, tax rules always apply, depend on individual circumstances and can change.
Types of Junior ISA
There are two types of Junior ISA available in the UK, and each is designed to suit different approaches. While both types share the same annual allowance and ownership rules, the way money is held, and the level of potential risk involved, is different.
Junior Cash ISA
A Junior Cash ISA works in a similar way to a children’s savings account. Money paid in is held as cash, and interest might be accrued over time. Savings in a Cash Junior ISA can grow tax‑free, with permitted contributions up to a certain annual limit, which currently sits at £9,000 per tax year.
This option might be preferred by people looking for lower risk and more certainty around what the child will get back. However, it’s worth bearing in mind that inflation can affect the spending power of savings over the long term.
Scottish Friendly does not provide Junior Cash ISAs.
Junior Stocks and Shares ISA
With a Stocks and Shares Junior ISA, you invest your money on behalf of the child rather than holding it as cash savings.
Any potential returns in a Stocks and Shares Junior ISA depend on how investments perform, and while investment decisions can influence outcomes, returns are not guaranteed. The value of investments can go down as well as up, and the child could get back less than was paid in.
This type of account may be more suitable for long-term investing where you are comfortable with investment risk.
A child can only have one Cash JISA and one Stocks & Shares JISA. The child can hold one or both types of Junior ISA at the same time, as long as total contributions stay within the overall annual allowance.
Scottish Friendly is an award-winning Stocks and Shares Junior ISA provider. Investment Life & Pensions Moneyfacts Awards 'Best Junior ISA provider' 2019-2025.
Can a grandparent open a Junior ISA?
A grandparent can’t open a Junior ISA themselves unless they have parental responsibility for the child. Under current ISA rules, only a parent or legal guardian is allowed to open a Junior ISA on a child’s behalf. This applies to both Junior Cash ISAs and Junior Stocks and Shares ISAs.
Once a Junior ISA has been opened by a parent or legal guardian, grandparents are typically welcome to contribute money to the account. Any contributions count towards the child’s annual Junior ISA allowance, rather than the grandparent’s own ISA allowance.
It’s important to remember that any money in a JISA belongs to the child and is locked away until they turn 18, when only they can gain access to the money.
Who can add money to a Junior ISA?
Adding money to the account once it’s open is more flexible. Once the Junior ISA is set up, anyone can deposit money in it, including grandparents, relatives, or family friends.
Payments into a JISA are typically made by direct debit or bank transfer, depending on the provider. To do this, contributors usually need the Junior ISA account number and the provider’s details.
All contributions to a Junior ISA count towards the child’s annual allowance, regardless of who makes the payment, so it’s important for the parent or guardian to keep track of the total paid in each tax year if multiple people are contributing.
Who can withdraw the money from a Junior ISA?
Money saved or invested in a Junior ISA is held in the child’s own name, and it legally belongs to them. That means no one else can withdraw money from a Junior ISA for themselves.
Once money has been deposited, the funds will be locked away until the child turns 18, but they may be able to manage the Junior ISA from age 16, depending on the provider. This typically means they can do things like view their account, track performance, and even make certain investment choices.
Even though the account holder can manage the JISA once they turn 16, they still can’t take money out at this stage. Once the child turns 18, their Junior ISA typically converts into an adult ISA - a process known as ‘maturing’ - and they can start withdrawing funds or managing future payments themselves from that point.
How much money can you add to a Junior ISA?
Just like with an adult ISA, there’s a set limit on how much can be paid into the child’s Junior ISA each tax year. The annual contribution limit for a Junior ISA is currently set at £9,000, which can be contributed to by anyone, but only the parent or guardian can open the account.
This allowance is separate from the adult ISA allowance, as the Junior ISA belongs to the child, so contributions made for a child don’t affect how much an adult can save or invest in any ISAs they hold on their own.
The £9,000 limit applies to the total paid in, regardless of who makes the contributions. Any amounts added over the course of the tax year count towards the same annual limit, until it resets at the start of the next financial year.
Can you add money to multiple Junior ISAs?
Yes, you can add money to more than one Junior ISA. Each child can have two Junior ISAs in total; one Junior Stocks and Shares ISA, and one Junior Cash ISA. That means you can add money to different types of ISA for the same child, or to the individual Junior ISAs of different children.
If you have two grandchildren, for example, each may have their own Junior ISA with their own annual allowance. This means you can make contributions to each grandchild’s Junior ISA separately, up to the annual limit of £9,000 per child, minus any contributions already made.
Even though the rules allow a child to have both a Junior Cash ISA and a Junior Stocks and Shares ISA, any money added across both ISAs must stay within the single annual Junior ISA allowance for that child.
Can grandparents decide how the money in a Junior ISA is used?
Funds in a Junior ISA are locked away until the child turns 18, at which point the account converts to a standard ISA, allowing the child to access the funds without paying tax on them.
Money saved or invested in a Junior ISA belongs to the child, which means grandparents cannot decide on the grandchild’s behalf how it will ultimately be used.
While grandparents are welcome to contribute money to the account, they don’t have any control over withdrawals, or how the money is spent once the child gains access to it at the age of 18.
Responsibility for managing the account, including any investment choice, initially sits with the parent or legal guardian who opened the Junior ISA. Even then, the funds remain the child’s property. When the child turns 18, they gain full control and can choose how to use the money themselves.
Are Junior ISAs subject to Inheritance Tax?
One of the key tax benefits of a Junior ISA is that it can allow families to put money aside for children or grandchildren without them needing to pay Inheritance Tax on the money contributed.
Contributions into a Junior ISA generally fall outside a grandparent's estate for Inheritance Tax purposes if they fall within annual gift allowances or meet the 'seven-year rule'. This is because they are treated as gifts, which are normally exempt if the grandparent survives for seven years or the gift is within annual allowances.
While interest or investment growth within a JISA may benefit from certain tax advantages, tax rules apply differently depending on individual circumstances. Tax rules can also change in the future, so it may be helpful to seek independent advice.
How might families use a Junior ISA?
Families might use Junior ISAs in different ways depending on their circumstances, priorities, and how far into the future they’re planning. While there’s no one approach to saving or investing, a Junior ISA might be a great option for supporting a child financially over the long-term.
While a Junior ISA can support long-term saving goals, it’s important to remember that investment growth is not guaranteed and access to the money is restricted until age 18.
As a financial head start
Some families use a child’s Junior ISA as a way to help them start adulthood with some financial support in place. By choosing to start saving or investing early, even affordable and regular contributions can build up over time.
The money belongs to the child and stays invested or saved until they turn 18, which can help ensure it’s set aside specifically for their future rather than used earlier for day‑to‑day costs.
As a nest egg towards a first home
While there are no restrictions on how the money in a Junior ISA should be spent when the child reaches 18, some families might view a Junior ISA as a way to help prepare for larger expenses that might arise in early adulthood.
Another possible use for JISAs is building a pot that can help with the cost of buying a future home. Families may decide to begin putting money aside over the years to cover significant financial milestones, like towards the cost of a deposit, should their child decide to buy their own home.
To help with the cost of education
Some parents and grandparents may see a Junior ISA as a useful way to help with education‑related costs. This might include contributing towards university fees, accommodation, or other expenses that come up should a child choose to pursue higher education.
Because the money can’t be accessed until age 18, it can align with the timing of these costs, although the child ultimately decides how the funds are used.
Are there other ways to gift money to a grandchild?
While Scottish Friendly specialises in providing Junior Stocks & Shares ISAs, a Junior ISA isn’t the only way families might choose to support a child financially. There are several other options available, depending on your timeframe, need for flexibility, and how much control you want to have over any money you contribute.
Children's savings accounts
Children’s savings accounts are bank accounts opened in a child’s name with the aim of setting money aside for their future. Children's savings accounts offer a flexible way to save for grandchildren, allowing the child access to funds at any time, with interest earned being tax-free as long as the child's income remains below a certain threshold.
They can be a useful way to save money for shorter-term goals, as the money in a child savings account can be easier to access than funds within a Junior ISA.
Interest rates and access rules will vary by provider, and parents or guardians usually manage the bank account until the child reaches a certain age. Unlike Junior ISAs, withdrawals may be possible before adulthood.
Junior pensions
A junior pension allows money to be invested into a long‑term pension pot for a child. Payments made into a junior pension benefit from tax relief up to a certain annual limit, which can boost the amount invested.
While this can help children build retirement savings early, the key limitation is access. Because it’s a pension, the child usually won’t be able to withdraw the money until later life - currently age 57. This makes junior pensions suitable only for very long-term planning.
Premium bonds
Premium Bonds are another savings option that may often be considered for grandchildren, allowing investments of between £25 and £50,000 with the chance to win tax-free prizes, including a potential £1 million prize.
The money saved via Premium Bonds can be cashed in at any time, but only by the parent or legal guardian. Returns aren’t guaranteed, however, and some families may prefer more predictable growth over time.
Lump sum gifts
Some grandparents prefer to leave lump sum gifts to their grandchildren. Under current rules, up to £3,000 per tax year can usually be gifted without it counting towards inheritance tax.
When giving money as a lump sum, tax rules apply and will depend on individual circumstances. It may be helpful to consider how and when gifts are made, and whether you would benefit from independent financial or tax advice.
Some key takeaways
Grandparents can’t open a Junior ISA unless they have parental responsibility, but they can contribute once it’s set up.
Only parents or legal guardians can open and manage the account, though anyone can pay in.
Contributions count towards the child’s £9,000 annual Junior ISA allowance, not the adult’s ISA limit.
The money in a Junior ISA belongs to the child and can’t be accessed until they turn 18.
Grandparents don’t control withdrawals or how the money is used, even if they contribute.
Important information
The value of stock market investments can go down as well as up, so you or your child could get back less than you’ve paid in.
The funds paid into a Junior ISA belong to the child and can only be accessed by them when they turn 18.
Tax-Free means the investment grows free from tax, with the exception of any tax your provider has already paid on your behalf (for example on dividends from UK shares). Tax treatment depends on individual circumstances and may be subject to change in the future.
This information is for general guidance only and does not constitute personal financial advice.
Scottish Friendly does not provide financial advice. If you’re unsure whether an ISA or Junior ISA is suitable for your situation, you may want to speak to an independent financial adviser.