Children Savings Advice

mrslaudav

Dear all,
Advice appreciated after watching the latest episode of Martin Lewis Money Show. 

I have a 2 year old son and an ISA in his name. I save £50 a month into this ISA. The rate is not good so need to swap ISA to new one- but he is due to inherit a sum of money which will take him over the yearly limit allowed to save each year. Should I open another ISA for this sum or put it into a children’s savings account? Also can I take the money out of an ISA or does it have to stay in the ISA accounts until he is 18? 

Also we are just about to welcome Child No.2 and would like to save £50 a month for this child as well. Should I open another ISA or a child savings account? 

So many questions! Any advice gratefully received please. 

eskbanker

Money in a Junior ISA can be transferred to other JISAs but can't be withdrawn until the child reaches 18 so don't put anything in there unless this constraint is suitable for what the money is intended for.

For long-term money such as this, it would be worth looking at stocks and shares JISAs rather than cash products, as this is likely to be more suitable for money not needed for 15+ years.

Re the inheritance, much depends on how much you're talking about.  If it's no more than about £8K then you can split it across this tax year and the next, which starts in less than two months. 

xylophone

https://www.gov.uk/junior-individual-savings-accounts
 except in very sad circumstances, money in a JISA cannot be withdrawn (and then only by the child) until the child reaches the age of 18.
You cannot pay more than the total subscription for the tax year into a JISA (whether in cash or a mixture of cash/stocks and shares/ stocks and shares only.
You can top up his JISA to the full amount for the tax year and add the full subscription in the next year.
Any money over above the amount can be paid into an account in his name held by you in bare trust.

https://www.thisismoney.co.uk/money/saving/article-1583863/Best-savings-rates-Junior-Isas-children-s-accounts.html
Currently, the highest interest on a cash JISA is offered by Coventry BS.

https://www.coventrybuildingsociety.co.uk/consumer/product/savings/children/junior-cash-isa.html

Gareth2020

I am a savings accredited colleague in a bank so fitting I could answer this.
Saving regularly into a ISA?  Although in my job I cannot offer advice, my common sense would tell me that although Kids savings accounts are decent rates, make sure you maximise the full range of savings.  Saving Regularly into an ISA? Why not consider saving monthly into a Kids Monthly Saver (Halifax 4.5%) then once this matures pour it into the ISA with the addition of 4.5% bonus come maturity.  Of course any extra that you have carried over can be of course dumped into the ISA or be used to feed additional Monthly Savers which I am a fan off.

Regarding JISA (Junior Cash ISA) funds cannot be touched until the child turns 18 unless in exceptional circumstances.  Make sure you also check the performance of the JISA regularly and ditch and switch if a better rate is offered elsewhere.  Loyalty doesn't pay.