Understanding the terminology associated with Junior ISAs is crucial to making informed financial decisions for your child’s future. With this in mind, we have created a comprehensive glossary of relevant terms. This resource is designed to help parents, guardians, and potential contributors navigate the sometimes complex financial jargon associated with these savings accounts. Our aim is to make the process of setting up, managing, and understanding a Junior ISA as straightforward as possible. Whether you are entirely new to this area of personal finance or simply need a refresher on specific terms, we hope that our glossary will be a helpful tool.
Annual Allowance: The maximum amount that can be deposited into a Junior ISA each tax year.
Cash Junior ISA: A type of Junior ISA where money is saved in cash, similar to a savings account.
Compound Interest: The process by which interest is added to the principal amount, and then interest is earned on that larger amount.
Contributor: A person who pays money into a Junior ISA.
Equities: Another term for stocks and shares, often included in an Investment Junior ISA.
Financial Year: A period of 12 months, typically from April to April, used for tax purposes.
HMRC: Her Majesty’s Revenue and Customs. The UK government department is responsible for tax collection.
Income Tax: A tax on income, which generally will not apply to a Junior ISA as children, generally do not generate an income until they reach adulthood.
Investment Junior ISA: A type of Junior ISA where money is invested in stocks and shares.
ISA Manager: The financial institution or company that administrates the Junior ISA.
ISA Transfer: The process of moving funds from one ISA to another, or from one ISA provider to another.
Junior ISA: A tax-free savings account for children under 18, set up and managed by a parent or guardian.
Maturity: The date when a Junior ISA becomes an adult ISA when the account holder turns 18.
Parent/Guardian: The adult who opens and manages a Junior ISA on behalf of a child.
Savings Interest: The interest earned on the money saved in a cash Junior ISA.
Stocks and Shares: These are equities or company shares that can be invested in via an Investment Junior ISA.
Subscription: The amount of money paid into a Junior ISA during a financial year.
Tax-Free: The status of the interest, dividends, and capital gains from a Junior ISA, meaning they are not subject to UK tax.
Tax Year: A period of time that HMRC uses to assess personal income tax. It runs from 6th April to 5th April the following year.
Trustee: The individual who is legally responsible for managing a Junior ISA on behalf of the child until they turn 18.
Unit Trust: A type of fund commonly included in Investment Junior ISAs, where money from many investors is pooled to invest in a broad range of assets.
Withdrawal: The process of taking money out of an account. Money can typically only be withdrawn from a Junior ISA by the account holder and only after they turn 18.
Yield: The return on an investment, such as the interest or dividends received from a Junior ISA.
The world of Junior ISAs can seem daunting due to its complex terminology. However, we believe that with the right resources, everyone can navigate it successfully.
The website and the information contained therein should not be regarded as an offer or solicitation to conduct investment business in any jurisdiction other than the UK. Past performance is not necessarily a guide to future performance and the value of your investment may fall as well as rise, and any income received in the form of dividends may fluctuate. You may not get back the full amount when the account is closed. If paying regular monthly contributions please bear in mind that if contributions are not maintained you will be less likely to achieve the investment amount that was originally projected.
The information on this website is not advice, it is provided solely to enable you to make your own investment decisions. The investments and /or investment services referred to may not be suitable for all investors.
The Children’s ISA Limited is authorised and regulated by the Financial Conduct Authority. (FCA No: 563043)
The Children’s ISA Limited is a company registered in England and Wales. Registered Company Number: 07486015
Registered Office: Unit 2, Digital Park, Pacific Way, Salford Quays, M50 1DR