A child born today has one thing no adult investor can buy back: time. Eighteen years of it, untouched, before they can spend a penny. The Junior ISA is the simplest way to turn that time into a meaningful sum, tax-free, and most parents who could use one never open it.

Here is how the Junior ISA works: how much you can put in, who can contribute, the cash and investment versions, and what happens when your child turns 18.

What it is

A Junior ISA is a tax-free savings and investment account for a child under 18. ISA stands for Individual Savings Account, and like every ISA it shields whatever is inside from tax. At the time of writing the allowance is £9,000 a year per child, and it sits entirely separate from your own £20,000 allowance, so paying into it does not eat into yours at all. As always, the figure is set by the government and can change, so check gov.uk.

Who can open it, and who can pay in
A parent or guardian opens the account, but once it exists, anyone can contribute, grandparents, family, friends, up to the £9,000 total for the year. It is a tidy way for a whole family to club together for a child without anyone’s own ISA allowance being touched.

Cash or investments
There are two versions, a cash Junior ISA and a stocks and shares Junior ISA. A child can hold one of each, and you can split the £9,000 between them. Cash is steady. The investment version can rise and fall in value, but given the long runway before the child turns 18, it has the kind of time horizon over which growth has historically had room to work. That is the historical pattern, not a promise, and the value can still fall.

Locked until 18
This is the part to be clear-eyed about. The money belongs to the child and cannot be withdrawn until they turn 18, other than in exceptional circumstances. From age 16 they can take over managing the account, and at 18 it automatically becomes an adult ISA, in their name, theirs to do with as they please. That last point is worth sitting with before you start: at 18 it is entirely their decision, whether that is a house deposit, university, or something you would not have chosen.

Why the long runway matters

The reason a Junior ISA can be so powerful has nothing to do with picking the right investment and everything to do with time. Money left to compound for eighteen years has a long stretch to grow, and the earlier it goes in, the longer it works. I explain the mechanics of that in How Compound Interest Really Works.

How much can I put in each year?
Up to £9,000 per child, at the time of writing. It is separate from and on top of your own £20,000 ISA allowance.

Who can contribute?
A parent or guardian opens it, but anyone can pay in, as long as the total stays within £9,000 for the year.

When can the child access the money?
At 18, when it becomes an adult ISA. They can start managing it themselves from 16, but cannot withdraw before 18 other than in exceptional cases.

Cash or stocks and shares?
Either or both. A child can hold one cash Junior ISA and one stocks and shares Junior ISA, with the £9,000 split between them as you choose.