Junior S&S ISA - Moving Abroad

jkpan

Hi,
I had opened a Junior S&S ISA with Vanguard for my children a few years ago. We have now decided to move abroad and after notifying Vanguard, I was told that they will allow no further deposits/changes, just selling funds, withdrawals and change of provider. I was not expecting this tbh as thought that the government allowed deposits to JISA even if the children move abroad but guess they have their own rules. My question is whether someone knows of a similar product that I can transfer the accounts to that will allow deposits/buying funds whilst children are abroad?
Many Thanks!

eskbanker

jkpan said:

I was not expecting this tbh as thought that the government allowed deposits to JISA even if the children move abroad but guess they have their own rules.

The general ISA rule is that contributions aren't allowed after moving abroad, but https://www.gov.uk/junior-individual-savings-accounts/add-money-to-an-account does say

If your child moves abroad, you can still add cash to their Junior ISA.

bowlhead99

It's true that based on government rules, it's still OK for JISAs to be contributed to if the child is abroad, as long as they were UK resident when the account was opened. But all ISA managers can set their own rules on what they will accept and some prefer to have a blanket rule that they won't take contributions from overseas donors or for overseas-resident customers, finding it easier to set the same blanket rule for JISAs as for adult ISAs.

From https://www.gov.uk/guidance/repair-a-junior-isa-and-manage-account-holders-subscriptions notes

Who can subscribe to a JISA
Any person can subscribe to a JISA by way of a cash payment. The person subscribing need not be resident in the UK, nor do they have to be related to the child. Providers are not required to obtain the consent of the registered contact or account holder before accepting subscriptions from any person. However providers may operate their own rules concerning the acceptance or refusal of any particular subscription, subject to their normal regulatory requirements. Subscriptions to the JISA can be made even if the child is not present in the UK. 
.......
The child, the child’s parents or other relatives, local authorities, charities or any other person can subscribe to the JISA. All subscriptions must be made in cash, which may include payment by cheque, direct debit, charge card, credit card, direct credit and standing order - depending on the payment methods accepted by the account provider. JISA rules do not require providers to identify or record the identity of the third party contributor, or to advise the registered contact or account holder of this fact, although there may be other regulatory reasons providers may choose to do this.
........
The provider may impose conditions on opening and maintaining a JISA, such as requiring an initial minimum lump sum subscription or minimum regular payments. Where a provider operates general account rules that would prevent it accepting particular subscriptions (for example, subscriptions made from particular countries) these rules may be applied in the normal way, subject to the normal regulatory requirements.

So, once an account has been successfully applied for while the child is a UK resident (or dependent of crown servant overseas), the child can keep it, and anyone can contribute to it ('subscribe to it') within the annual limits, whether they are UK resident or not and whether or not the child is in the UK.  But providers can implement their own rules for their own businesses within reason.  Basically the government can't force ISA managers to accept money from anyone, it's up to the ISA manger themselves.

When this came up a few months back, it was mentioned that Triodos Bank (who have a few locations around Europe) would allow kids to keep their accounts and add to them even after moving abroad:

https://www.triodos.co.uk/faq/what-happens-if-i-the-child-move-abroad-am-i-still-able-to-pay-into-my-junior-cash-isa?id=d89c5ec6768a

Yes. As long as the child was a UK resident when the Junior cash ISA was opened, you will still be able to pay into the Junior cash ISA even though you and/or the child have moved abroad.

Of course, if the child is quite young and has a lot of years to go before it can be withdrawn at age 18, then locking the money up in a low-interest paying cash account just to allow further JISA contributions to be made may be counterproductive. Over a decade or more, the value of the cash would reduce in real terms.  You might find it better to keep the existing investments at Vanguard - because S&S investments will grow over the longer term and as they mention, you can still change them etc, you just can't add new money.

I haven't exhaustively checked which S&S JISA providers allow new money to be added once the child is overseas as i'm not in the market for it myself - it's not the sort of question that pops up on simple fee comparison sites.  May be worth emailing a few.

Simplest thing may be to just leave the existing money at Vanguard and do the future investing in the parents' names wherever they happen to be around the world, though this may not be very tax efficient if the amounts are large and don't easily fit within the parents' own tax allowances in their new country of residence.

jkpan

Many thanks for the help! Agree think the best way forward is to contact other providers and see if I can make a transfer otherwise as bowlhead99 said just leave the money where it is and invest elsewhere.

Alexland

You might want to double check with Fidelity as their FAQ on their website says "Anyone (including grandparents, other family members or friends) can contribute to a Junior ISA" and their Junior ISA is completely free if you stick to funds. The downsides are they are currently only accepting cash transfers (so there would be some time out of the market) and it seems they want paper forms for others to contribute.

https://www.fidelity.co.uk/junior-isa/junior-isa-faq/#2281749

You would need to consider the new country's tax rules on overseas accounts.

MDMD

Alexland said:

You would need to consider the new country's tax rules on overseas accounts.

OP - as above and you haven’t said where the child is going but if going to the US then a stocks and shares ISA is pretty much the least tax efficient vehicle to possess due to their horrendously complicated PFIC rules that essentially tax the dividend income and withdrawals (and in some cases even a sale of investment to pay fees) as ordinary income.

https://www.goldinglawyers.com/uk-isa-individual-savings-account-u-s-persons-tax-reporting/

https://hodgen.com/children-investment-accounts-pfics-mess/

jkpan

Thanks for the information! My JISA also allowed for others to contribute but was notified this is not allowed (even if they are UK residents) now that the children are abroad. All other providers I go a reply from refused a transfer. Still have not contacted Fidelity, next on my list.
Moving to EU so hopefully tax implications are less severe. All investments are UCITS so hope they are still cost effective but do really need to talk to an accountant to be sure.