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Junior ISA Take Up Soared 48% In 2019

written by Bella Palmer
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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 by the 2011 autumn budget, is undoubtedly on the rise as a whole. HMRC figures show that a total of 794,000 Junior ISAs were opened over the 2016-17 tax year, rising to 907,000 over the 2017-18 tax year. While it will be several months before final figures are in for the 2019-20 tax year, it would be no surprise if there has been another stride forward in take-up numbers.

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.

future value

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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Important:

This article is for information purposes only.

Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

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