Children's Savings Accounts Guide UK (Junior ISA, Child Accounts 2026)

Junior ISA (JISA) Explained

A Junior ISA is a long-term, tax-free savings or investment account for children under 18 who live in the UK. The annual subscription limit for 2026/27 is £9,000. There are two types: Cash JISA (works like a children's savings account but tax-free) and Stocks and Shares JISA (invests in funds, shares, or ETFs). Any UK child with a Child Trust Fund can open a JISA instead, or the CTF can be transferred into a JISA. Only the child's parents or legal guardians can open a JISA, but anyone — grandparents, aunts, uncles, family friends — can pay into it, up to the £9,000 annual limit. The money is locked in until the child turns 18, at which point the JISA converts to an adult ISA (either Cash or Stocks and Shares) and the young person gains full control. No tax is payable on interest, dividends, or capital gains inside a JISA. If the child dies before 18, the value of the JISA forms part of their estate. For most families, a Stocks and Shares JISA offers better long-term growth potential than cash, particularly when saving over 10+ years. See our Stocks and Shares ISA guide → for investment options.

Children's Savings Accounts (Easy Access and Regular Saver)

Most high street banks and building societies offer children's savings accounts that can be opened from birth with as little as £1. These are not tax-sheltered like a JISA, but they are simple to open and offer flexible access. Easy-access children's accounts typically pay 2–4% interest (depending on the provider) and allow withdrawals at any time. Some accounts cap the balance before the rate drops, often between £2,500 and £5,000. Regular saver accounts for children offer a higher fixed rate (sometimes 4–6%) in exchange for a fixed monthly deposit, usually for 12 months. Children's accounts are usually operated by a parent or guardian until the child reaches age 7 or 11, depending on the provider. The interest earned is subject to the personal savings allowance — children have the same £1,000 allowance as adults for basic-rate tax, but any interest on money gifted by parents may be taxed as the parent's income. Unlike a JISA, children's accounts do not lock money away until 18, making them more suitable for shorter-term goals or smaller amounts. Compare rates across providers as the best-buy tables change regularly.

Child Trust Funds (CTF) Converting to JISA

Child Trust Funds were available for children born between 1 September 2002 and 2 January 2011. The government made initial payments of £250–£500, and families could add up to £9,000 per year tax-free. Child Trust Funds are no longer available to open, but existing accounts remain open and can continue receiving contributions. You can transfer a CTF into a Junior ISA at any time, which may offer lower fees, better investment choices, or higher cash rates. Not all providers accept CTF-to-JISA transfers, so you may need to open a JISA with a provider that does. Once transferred, the account becomes a JISA with the same £9,000 annual limit and the same rules. The transfer does not affect the child's £9,000 subscription limit for the year. Any money already in the CTF moves across without penalty. If the child is approaching 18, consider whether to keep the CTF or transfer — some CTFs have competitive rates and low fees that compare well with JISA alternatives. The child takes control of the account at 18 as with a JISA. Check your CTF's performance and charges before deciding to transfer.

Tax Rules on Children's Savings (£100 Parental Gift Rule)

The parental settlement rules (often called the £100 rule) are the most important tax consideration for children's savings. If a parent gifts money to their child and that money generates more than £100 in interest or income per tax year, the excess is treated as the parent's income and taxed at the parent's marginal rate. This applies to each parent individually — so a mother and father can each generate up to £100 of tax-free income on gifts to the same child, meaning up to £200 per child per year before the parent pays tax. Money from grandparents, other relatives, or friends is not caught by this rule — the child's personal savings allowance applies instead (up to £1,000 of interest tax-free for a basic-rate taxpayer). Money held in a Junior ISA is exempt from this rule because all growth within a JISA is tax-free regardless of who contributed. Similarly, Premium Bond winnings for children are tax-free. If you are a higher-rate or additional-rate taxpayer, the parental gift rule makes JISAs particularly attractive because any interest above £100 per parent is taxed at 40% or 45%. Consider using a JISA or having grandparents contribute to stay within the tax-free limits.

How Grandparents and Family Can Contribute

Grandparents and wider family can contribute to a child's savings in several ways. Junior ISAs allow anyone to pay in up to the £9,000 annual limit — grandparents can set up a standing order directly into the JISA. The advantage is that the parental £100 rule does not apply, and all growth is tax-free. Children's savings accounts can also receive deposits from anyone, but interest on money gifted by grandparents is taxed against the child (using their personal savings allowance), not the parents. Grandparents can also open grandparent-owned savings accounts in their own name for the child, but the interest is then taxed as the grandparent's income — this is usually less efficient. Another option is to contribute to a pension for the child — a Junior SIPP (Self-Invested Personal Pension) can receive up to £3,600 per year gross (£2,880 net, with basic-rate tax relief added by HMRC), and the money is locked in until age 57 (rising to 58 from 2028). For younger children, Premium Bonds can be bought for them by parents, grandparents, or guardians — the maximum holding is £50,000 per child, and prizes are tax-free. Family members should think about the access age: JISA at 18, Junior SIPP at 57, Premium Bonds at 16 (the child can cash them in).

Choosing the Right Account for Your Child

The best account depends on your savings timeline, amount, and tax position. For long-term saving (10+ years), a Stocks and Shares JISA is usually the best choice — the £9,000 annual allowance, tax-free growth, and the power of compounding over 18 years make it hard to beat. For smaller, flexible savings (e.g., birthday money or a regular gift), an easy-access children's savings account offers simplicity and no lock-in. For regular contributions with a higher rate, look at children's regular saver accounts, which often pay 4–6% for 12 months — but be aware the money is accessible, unlike a JISA. If you are a higher-rate taxpayer, prioritise a JISA to avoid the parental £100 rule. If your child has a Child Trust Fund, review its performance annually and consider transferring to a JISA if fees are high or investment choices are poor. Grandparents wanting to contribute should use a JISA to keep it simple and tax-efficient. You can also split savings across accounts — for example, using a JISA for the main savings and a flexible children's account for smaller, accessible funds. Never exceed the JISA annual subscription limit across all accounts, as HMRC may charge tax on excess contributions.

FAQs

Can I open a Junior ISA for my child if they already have a Child Trust Fund?

Yes. You can open a JISA if your child has a CTF, but you cannot pay into both in the same tax year. You can transfer the CTF into the JISA to simplify things — the combined annual limit remains £9,000.

What happens to a Junior ISA when the child turns 18?

The JISA automatically converts to an adult Cash ISA or Stocks and Shares ISA. The young person gains full control — they can withdraw, transfer, or keep the account. If they do nothing, the provider will typically move it to an easy-access ISA.

Can I withdraw money from my child's Junior ISA before they turn 18?

No. Withdrawals from a JISA are not permitted before age 18, except in cases of terminal illness or death of the child. This is a key difference from a flexible children's savings account.

Are children's savings accounts taxed?

Interest on children's savings accounts is generally tax-free up to the child's personal savings allowance (£1,000 for 2026/27). However, interest on money gifted by parents is taxed as the parent's income if it exceeds £100 per parent per child. JISA growth is always tax-free.

Can grandparents open a Junior ISA for their grandchild?

No, only a parent or legal guardian can open a JISA. But grandparents can pay into an existing JISA up to the £9,000 annual limit. Grandparents can also give cash gifts directly to the parent to deposit.