What is the difference between a Stocks & Shares JISA and a Cash JISA?
- Junior Cash ISA – A Cash JISA is like a bank or building society savings account, but neither you nor your child will pay tax on any interest they earn on their savings. Unlike a regular savings account, you cannot withdraw money from a Junior Cash ISA and the child will only be able to access the money held in a Junior Cash ISA when they turn 18.
- Junior Stocks and Shares ISA – Contributions made on behalf of your child into a Stocks and Shares JISA can be used to invest and aren't subject to tax on any capital growth, interest or dividends received, and so can potentially offer better returns than Cash ISAs. With a Wombat JISA, you can invest in stocks and ETFs in a tax-efficient wrapper for your child (which they can only access at 18). However, remember when investing your capital is at risk and you may get back less than you put in.
Your child can have either type, or both types of JISA, but only a maximum of one of each and their £9,000 tax-free allowance is shared across both accounts.
There also used to be a third type, called a Child Trust Fund (CTF). CTFs are no longer available for creation, though if you already have a CTF for your child, you can keep paying into it, or convert it into a JISA. You can easily transfer an existing JISA or CTF to Wombat. Simply download the app available on the Play Store or the App Store and open a JISA to start the process.