Q

Should I get a JISA?

A

If you have a child, absolutely.

Should you open a JISA, short for Junior Individual Savings Account? Absolutely not — unless you’re one of those weirdo types who likes to provide for your kid’s future and get free money from the government. Seriously, JISAs are an absolutely irresistible financial instrument for parents looking for a way to save or invest for their kids.

How do they work? A parent or guardian, who will become known to the government as the account’s “registered contact,” opens an account for a kid between one day and 17 years old, and invests with the exact same flexibility afforded to anyone with a standard ISA, (though with a lot less money; currently, the annual JISA limit is £4,128, compared with £20,000 for the adult version.) After that, any interest or gains earned won’t count as income tax by HMRC. When the child turns 18, like the final act of an extraordinarily boring fairly tale, the JISA magically transforms into a regular ISA, and the child is able to access the money in the account, and continue contributing the full ISA limit until the day she dies.

Is it worth it? If you deposited the maximum amount into your kid’s JISA for a decade you should have in excess of £50,000. If a £50,000 investment were to earn a respectable 5% in a year, the account would net a cool £2,500. Depending on how much income you earn, you’d forfeit anywhere from £500 to £1,125 of those gains to taxes. Paying absolutely nothing is preferable to paying £1,125, right? The one thing to remember about JISAs is that until the child is 18, the money cannot be withdrawn from the account (the only exception being if the child becomes terminally ill.) And those incredibly rare parents who like to control their kids’ affairs must also remember that once the child turns 18, the money is hers to do with as she wishes, whether it be to finance an around-the-world trip, educational expenses, or an enormous back tattoo reproduction of Gustav Klimt’s The Kiss.

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