JISAs can be funded up until the child’s 18th birthday. But from their 16th birthday, children can also pay into an adult cash ISA. Therefore, it’s possible to fund a JISA and a cash ISA in tandem, paying in £29,000 each tax year.
This means that for the three-tax-year period starting from the tax year the child turns 16, they could pay close to £90,000 into their ISAs alone.
There is also a funding opportunity for clients whose children have a Child Trust Fund (CTF). And for those thinking about transferring a CTF to a JISA in the next few months, it’s worth revisiting the rules around the allowances.
The key point here is that CTFs and JISAs are completely separate wrappers with their own limits. Furthermore, while they mirror each other in terms of the annual subscription allowances, they follow different subscription years. With a JISA, the subscription year runs in line with the tax year. By comparison, the subscription year for a CTF starts on the child’s birthday. Therefore, you could make two subscriptions to a CTF either side of a child’s birthday, then transfer the CTF to a JISA and subscribe straightaway to the JISA.
With the new limits, this means a client could squirrel away £27,000 into a tax-free wrapper for a child in a matter of months.
However, putting large amounts into JISAs does bring additional challenges. Don’t forget a child will have full access to the JISA account when they reach the age of 18.