Junior ISAs vs Saving account

LutonGuy

Hi everyone, 

I am trying to open a Junior ISA account & I read the following article https://www.moneysavingexpert.com/savings/junior-isa/

On this article, it says "For most people junior ISAs AREN'T worth putting new money in unless they pay more than normal kids savings", I am not sure, I understand the full depth of the reasoning mentioned here. 

I am interested in opening in Junior Stock and share ISA so the money can be invested in stocks. Can anyone please explain me the reason why it is suggested not to open the ISA. 
 

Keep_pedalling

If the money is coming from parents then income of over £100 pa is taxed as though it is your income so even a cash JISA can be useful. Investing in S&S as over a good few years is likely to lead to a potential CGT liability so I would certainly use a JISA in your case. How old are the children?

LutonGuy

The child is only 13. Please do you mind explaining " Investing in S&S as over a good few years is likely to lead to a potential CGT liability"?

Keep_pedalling

We have funded S&Ss JISAS for our grandchildren since they were born (a lump sum + a top up each birthday). The oldest is now 7 and already his investments have grown well over his £3000 CGT allowance. If he wants to splurge his JISA after he is 18 he can do so without paying a penny of CGT.

Albermarle

LutonGuy said:

The child is only 13. Please do you mind explaining " Investing in S&S as over a good few years is likely to lead to a potential CGT liability"?

When you invest in shares, funds etc. , any gains you have made when you sell them are potentially liable for Capital Gains tax and any dividends paid are potentially subject to tax. Even if you do not need to pay any tax you have to keep records of buying price, selling price, dates etc.
If you invest within an ISA, you do not have any of these issues.

On this article, it says "For most people junior ISAs AREN'T worth putting new money in unless they pay more than normal kids savings", 

The article is referring to Cash JISA's, not S&S JISA's 

jimjames

Albermarle said:

LutonGuy said:

The child is only 13. Please do you mind explaining " Investing in S&S as over a good few years is likely to lead to a potential CGT liability"?

On this article, it says "For most people junior ISAs AREN'T worth putting new money in unless they pay more than normal kids savings", 

The article is referring to Cash JISA's, not S&S JISA's 

I'd still argue that this isn't great advice. Even for cash JISAs it's likely to be worth it if most money comes from parents.