Confusion over restrictions on under-18s trading shares

marcusjm

I always thought under 18s were not able to trade individual shares. However, I was surprised to see a S&S JISA being advertised. The information implied the parent needs to own the share and it would transfer to the child at 18. 

What controls does the provider have to ensure the child isn't selecting the shares (or is this allowable)? Is the JISA the only way for an under 18 to trade, due to the fact they cannot withdraw any profits until they're 18.

Thanks for any input.

jimjames

No controls, shares can be held in a JISA but limited to the annual contributions

https://www.ajbell.co.uk/faq/are-there-any-restrictions-what-i-can-invest-junior-isa

wmb194

marcusjm said:

I always thought under 18s were not able to trade individual shares. However, I was surprised to see a S&S JISA being advertised. The information implied the parent needs to own the share and it would transfer to the child at 18. 

What controls does the provider have to ensure the child isn't selecting the shares (or is this allowable)? Is the JISA the only way for an under 18 to trade, due to the fact they cannot withdraw any profits until they're 18.

Thanks for any input.

The same as savings accounts, some brokers allow you to open normally taxable, non-Isa or Sipp children's dealing accounts as bare trusts. Children have the usual tax allowances that adults have. 

The assets held within it will belong beneficially to the child but an adult acts as trustee. There wouldn't be anything to stop a child making investment suggestions but trustees are supposed to act in the child's best interests so perhaps the most insanely speculative investments wouldn't be a good idea and they should vet and rein them in.

E.g., AJ Bell https://www.ajbell.co.uk/investing-for-children/dealing-accounts-for-children

Malthusian

There is nothing stopping an under 18 from owning shares, but until they turn 18 (in England and Wales for non-JISAs), or 16 for Scottish bairns and all UK kids holding JISAs, there has to be an adult trustee or trustees looking after their money, who are responsible for all investment decisions (i.e. trading). 

marcusjm said:

What controls does the provider have to ensure the child isn't selecting the shares (or is this allowable)? 

From their 16th birthday the child is allowed to select the shares.
Until then, the adult is responsible for all investment decisions. If they give the child the password (or leave it lying around) they are still responsible. That's what being a minor means. It's no skin off the provider's nose if the parent is careless enough to let a minor play with the account. If money is lost as a result, the adult is responsible, not the provider.

 Is the JISA the only way for an under 18 to trade, due to the fact they cannot withdraw any profits until they're 18.

There's nothing stopping their parent (or A N Other) from opening an account designated to the under-18 and handing them the password.
However, if the under-18 invested all the money in unicorn farms and lost it, they could then sue the adult to make them put the money back. The adult was legally responsible for ensuring the child's money was invested as a prudent businessperson would, and violated that duty by handing over the password.
If an adult wanted to teach an under 18 about playing the markets, it would be better to do it the other way around - the adult keeps the password and lets the child pick the shares, subject to the adult's veto.