Parent paying Money into teenager's Cash ISA + Junior ISA

info_maniac

Can a parent pay money into their teenage child's (under 18) Cash ISA and Junior ISA? OR, does the parent pay into child's current account first and then the child transfers into the cash ISA (different banks).

Are there any tax implications? Any other considerations to keep in mind?

refluxer

Anyone who has access to the account details can pay into a child's JISA or adult ISA - it doesn't have to go via the child unless, perhaps, the adult ISA has a connected bank account in which case it might need to.

As a parent, it's sensible to pay into a JISA first as the interest earned is totally tax free whereas if a parent pays into a child's adult ISA, then the '£100 per parent per child' rule will apply to any interest earned from that money, just like it would to the interest earned in a normal (non-ISA) savings account.

info_maniac

refluxer said:

Anyone who has access to the account details can pay into a child's JISA or adult ISA - it doesn't have to go via the child unless, perhaps, the adult ISA has a connected bank account in which case it might need to.

As a parent, it's sensible to pay into a JISA first as the interest earned is totally tax free whereas if a parent pays into a child's adult ISA, then the '£100 per parent per child' rule will apply to any interest earned from that money, just like it would to the interest earned in a normal (non-ISA) savings account.

Thanks!! This is very useful information I was not aware of, especially the fact that the '£100 per parent per child' rule will apply to any interest earned from the child's Cash ISA.

Does this also apply if the child turns 18 during the tenure of the ISA? If the ISA is set to pay interest annually (so only at the end of 12 months for a 1 Year FR Cash ISA ) when the child has turned 18.

Also, some ISA providers (online savings only providers) have the provision of a nominated account and the ISA can be funded only from the linked nominated account. I guess in this case the linked nominated account needs to be a current account in Child's name?

refluxer

info_maniac said:

Does this also apply if the child turns 18 during the tenure of the ISA? If the ISA is set to pay interest annually (so only at the end of 12 months for a 1 Year FR Cash ISA ) when the child has turned 18.

I don't know the ins and outs of exactly how the rule works but I would guess it stops applying once the child becomes 18.

If that is correct, then presumably any interest credited after their 18th birthday isn't subject to the rule as the child is now an adult and the rule would no longer apply. The fixed rate/annual interest issue you mention is an interesting one though and I'm not sure how that would be treated.

It would definitely worth checking an official government source if this is likely to apply to your situation. A careful Google search might reveal similar questions that have been asked on the HMRC forums, which would be helpful as official replies are from HMRC representatives.

refluxer

info_maniac said:

Also, some ISA providers (online savings only providers) have the provision of a nominated account and the ISA can be funded only from the linked nominated account. I guess in this case the linked nominated account needs to be a current account in Child's name?

Yes - a nominated account will need to belong to the ISA account holder for security reasons. In this scenario, payments into the ISA would have to go via the child's nominated account (usually a current account).

xylophone

Information for parents and children.

https://www.litrg.org.uk/tax-nic/income-tax/working-out-what-taxable/gifts-and-loans#:~:text=If you are 16 or,ISAs is usually tax-free

If you are 16 or 17, the parental settlement rules also apply where your parents make a gift to an ordinary (adult) Individual Savings Account (ISA) in your name and your total income from parental gifts is over £100 before tax each year, even though income arising from ISAs is usually tax-free.

The "£100" is per parent per child.