Junior ISAs vs Child Trust Funds
Find out the key differences between Junior ISAs and Child Trust Funds (CTF).
Important information - investment value can go up or down and you could get back less than you invest. If you're in any doubt about the suitability of a stocks & shares ISA, you should seek independent financial advice. The tax treatment of this product depends on your individual circumstances and may change in future. If you are uncertain about the tax treatment of the product you should contact HMRC or seek independent tax advice.
What are the differences between a Child Trust Fund and a Junior ISA?
Child Trust Funds and Juniors ISAs are both savings accounts that encourage parents to save for their children .
Child Trust Funds (CTF) were available to children born between 1st September 2002 and 2nd January 2011 – after which they were replaced by Junior ISAs (JISA). CTFs remain active until the account matures when the child turns 18.
The first CTFs matured in September 2020 and had the choice of converting the fund into an adult ISA. Those still holding an account have the choice of switching to a JISA or keeping their fund until it matures.
Junior ISAs tend to offer greater flexibility, giving parents much greater choice of investment. See below for a breakdown in the differences before deciding whether switching is for you.
|Child Trust Fund||Junior ISA|
|Can I open an account?||No, CTFs stopped being available from January 2011||Yes|
|Can I have multiple accounts?||No, you can only have one stocks and shares CTF or one cash CTF.||Yes, you can have one cash JISA and one stocks JISA.|
|Does the child receive a voucher?||The Government gave a CTF voucher worth between £50 and £500 to children born between 1st September 2002 and 2nd January 2011||No|
|Can I transfer my account?||CTFs can either be transferred into a JISA or transferred to another CTF provider.||JISA accounts can be transferred, but not into a CTF.|
|What is the account’s contribution year?||A CTF contribution year runs from the child’s birthday to birthday.||A JISA contribution year is the tax year (6th April to the 5th April each year)|
Rules that stay the same for CTFs and Junior ISAs:
Since Junior ISAs replaced Child Trust Funds, there are some similarities that exist between both accounts:
- Children with either a CTF, cash or stocks and shares JISA can access their money from their 18th birthday. Although cash JISA holders can access and manage their account from their 16th birthday.
- You can contribute a maximum of £9,000 a year into both a CTF and JISA.
- You can choose between cash or stocks and shares for both accounts. However, a JISA allows you to invest in both at the same time.
- Junior ISAs are as tax efficient as Child Trust Funds.
- Both a CTF and JISA can be managed by a child’s parent or guardian. For a JISA, that must be just one parent or guardian.
Should you transfer your child’s CTF to a Junior ISA?
You should consider both accounts carefully and assess any differences. Junior ISAs sometimes offer higher interest rates, greater investment choice and lower fees – but this may not be the case for everyone. If you are not sure, seek advice from an independent financial adviser.
Can you have a Child Trust Fund AND a Junior ISA?
No, you cannot have both a CTF and a JISA. CTFs were replaced by JISAs in 2011 and share many of the same benefits, with Junior ISAs being more flexible in some areas. Both accounts have a maximum contribution limit of £9,000 (2021/22) and the child can access the money from the age of 18 (although children with JISAs can manage their own account from age 16). In both accounts, money is free from both income and capital gains tax.