Junior ISA Take Up Soared 48% In 2019
Junior ISAs leapt in popularity over 2019 with the UK’s second largest provider seeing a whopping 48% rise in the number of new wrappers opened over the course of the year. Admittedly, the Coventry Building Society, which reported the figures, pays a market leading rate of 3.6% on Junior ISA accounts, as well as requiring an initial deposit of just £1.
However, the popularity of the Junior ISA, first introduced
Junior ISAs can be opened by only the parents, grandparents or legal guardians of a child up until the age of 16. But anyone who wishes to can then pay into the account up an annual allowance that is now £4368 – up from £3600 when the wrapper was first introduced. Junior ISAs come with all of the same tax benefits as a regular adult ISA and are transferred to a regular ISA account when the holder reaches the age of 18 – or 16 if they wish.
One major plus of a Junior ISA, especially for higher earners, is that the £4368 allowance is in addition to an adult’s personal £20,000 allowance. So any additional funds available above an adult’s personal ISA allowance, up to the Junior ISA allowance cap, can be invested on a child’s behalf and still benefit from the same tax breaks.
Junior ISAs, like regular adult ISAs, come in both cash and stocks and shares formats. If a parent were to invest the full 2019-20 tax year Junior ISA allowance of £4368 every year for 18 years, on the basis of the money being invested in cheap tracker funds earning an annual average 5% compounded returns, the account would be worth almost £140,000. That should be more than enough to fund a university education or put down a very healthy deposit on a first property.
Source: Monevetor.com
As well as the Coventry Building Society’s 3.6% offer on Junior Cash ISAs, the other top offers, as listed by the Which?, consumer protection website, are 3.45% from Danske Bank, 3.25% from the Darlington Building Society, NS&I and TSB and 3.15% from Tesco Bank.
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