A Child ISA, commonly referred to as a Junior ISA, is a long-term, tax-free savings or investment account for children under the age of 18. Child ISA providers, like the Children’s ISA, have designed a product to help parents, guardians, and even grandparents put money aside for a child’s future. A Child ISA protects the money from income tax and capital gains tax, and gives the child full control when they reach adulthood.

For many first-time savers or those unfamiliar with the term “Junior ISA”, a Child ISA may seem like a broad category. But the concept is simple: it’s one of the most efficient ways to gift a child a financial head start.

What Types of Child ISAs Are There?

There are two types of Child ISA, and families can choose either one or both:

• Cash Child ISA
  
  A straightforward savings account with tax-free interest. It operates similarly to a standard children’s savings account, but any interest earned isn’t taxed. This option is often chosen for its simplicity and security, as there’s no risk to the capital invested.
  
• Stocks and Shares Child ISA
  
  A longer-term growth option that invests in the stock market. It has the potential to generate higher returns over time, especially for children with many years ahead before accessing the funds. However, as with all investments, the value can go down as well as up.
  

Parents and guardians can open both types, but the combined contributions across both accounts cannot exceed the annual allowance—currently £9,000 for the 2025/26 tax year.

Who Can Open a Child ISA?

Only a parent or legal guardian can open a Child ISA on behalf of a child. Once opened, however, anyone can contribute—family, friends, or even family friends acting in loco parentis. This makes it a popular gift alternative for birthdays, Christmas, or milestones such as christenings or naming ceremonies.

To be eligible, the child must:

• Be under 18
  
• Be a UK resident
  
• Not already have a Child Trust Fund (unless it’s transferred into the ISA)
  

Once set up, the account stays in the child’s name. Even the parent who opened the account cannot withdraw funds.

How Much Can You Save in a Child ISA?

For the 2025/26 tax year, the total annual allowance is £9,000. This is the maximum amount that can be contributed to the child’s ISA in a single tax year, across both types of ISA.

It’s worth noting:

• Contributions can be made as a lump sum or through regular monthly payments
  
• The allowance resets every tax year (ending 5 April), and unused amounts do not roll over
  
• Many providers allow you to set up standing orders to make regular savings effortless
  

When Can a Child Access Their ISA?

The money in a Child ISA is locked away until the child turns 18. At that point:

• The account automatically converts into an adult ISA
  
• The child gains full legal control
  
• They can choose to withdraw the money, keep it invested, or transfer it to another ISA provider
  

This legal handover ensures the child benefits directly from the savings made on their behalf.

While some parents may worry about their child spending the funds unwisely at 18, many families use this as an opportunity to discuss financial responsibility during the teenage years, making the eventual handover a milestone, not a risk.

Why Choose a Child ISA?

A Child ISA offers several key benefits:

• Tax-free growth: No income tax or capital gains tax on any interest or investment returns
  
• Clear ownership: The funds belong to the child, which simplifies gifting and avoids inheritance tax complexities
  
• Long-term growth: Particularly in the case of stocks and shares ISAs, early contributions can benefit significantly from compound growth over time
  
• Flexible contributions: From £10 gifts to the full £9,000 allowance, it’s adaptable for all circumstances
  

It’s especially suitable for those with a long-term outlook, such as families saving for university fees, house deposits, or helping a young adult get on the road.

Are There Any Risks?

With a cash Child ISA, the main risk is inflation outpacing interest. Here at the Children’s ISA, we only offer a stocks and shares ISA. The stock market comes with inherent risk, and volatility can potentially lead to loss, though over 10–18 years (like any long-term investment), one can expect growth of around 5% per annum, based on historical performance. Families should think carefully about:

• Their appetite for risk
  
• The child’s age and timeline to access
  
• The reliability of the provider
  

Always ensure that the provider is authorised and regulated by the Financial Conduct Authority (FCA).

Start an Investment ISA for a Child Today

Whether you’re a parent planning for your children’s future or a grandparent wanting to give a meaningful gift, our Junior Investment ISA offers a tax-efficient, transparent way to invest for a child’s future.

• No hidden charges
  
• Simple, jargon-free investing
  
• Flexible, regular or one-off contributions
  

 Open a Junior ISA today here.