Saving and Investing for Children in the UK: A Parent’s Guide

Preparing for your child’s financial future is one of the most valuable gifts you can provide as a parent. In the UK, there are several ways to save and invest for children, offering tax-efficient growth and a head start in adult life. This guide explores the options available for parents and guardians looking to save for their children’s future, from Junior ISAs to pensions for kids.

Junior Individual Savings Accounts (JISAs)

A Junior ISA (JISA) is a tax-efficient savings account designed for under 18s. There are two types: a Cash JISA and a Stocks and Shares JISA. The money in a JISA belongs to the child, but it cannot be accessed until they turn 18, at which point it converts into a standard ISA.

  • Cash JISA: Similar to a savings account, offering tax-free interest. Ideal for those who prefer a low-risk option.
  • Stocks and Shares JISA: Invests in equities, bonds, and other assets, offering the potential for higher returns at a higher risk.

For the 2023/24 tax year, the total annual subscription limit for JISAs is £9,000, which can be split between a Cash and a Stocks and Shares JISA.

Child Trust Funds (CTFs)

Child Trust Funds were a government initiative for children born between 1st September 2002 and 2nd January 2011. Like JISAs, they come in cash and stocks and shares varieties and have similar tax advantages. Parents and guardians can transfer a CTF to a JISA to take advantage of newer financial products and potentially better interest rates.

Children’s Pensions

Although it might seem far in the future, opening a pension for your child can be a profound step towards securing their retirement. The most common type is a Junior Self-Invested Personal Pension (SIPP). Contributions are topped up by 25% by the government as tax relief, up to £2,880 per year, which effectively becomes £3,600 with tax relief.

Investing in a pension for a child locks away the money until they are 55 (rising to 57 in 2028), but it can significantly compound over time, offering a substantial nest egg in retirement.

Bare Trusts and Designated Accounts

Bare trusts are another way to invest on behalf of your child. They allow you to hold investments in your name for the benefit of the child, with the assets and income belonging to the child for tax purposes. This can be a flexible option, but it has less tax efficiency compared to JISAs and SIPPs.

Designated accounts are standard investment accounts set up in an adult’s name but designated for a child. While they offer no specific tax advantages, they provide flexibility in managing investments for the child’s benefit.

Regular Savings Accounts

Many banks offer children’s savings accounts with competitive interest rates to encourage regular saving. These can be a good option for teaching children about money and saving, although they lack the tax efficiencies of JISAs or CTFs.

Tips for Saving and Investing for Your Child

  • Start Early: The sooner you start, the more time your investments have to grow.
  • Maximise Allowances: Utilise the full JISA or pension allowance if you can, taking advantage of the compound interest and tax relief.
  • Involve Your Child: Use savings accounts as a tool to teach your child about money, saving, and investing.
  • Review Regularly: Keep an eye on the performance of your investments and consider switching accounts if you find a better rate or investment opportunity.


Saving and investing for your child’s future in the UK offers several tax-efficient options. Whether you’re looking to give them a head start on their adult financial life, help with university fees, or even set them up for retirement, the key is to start as early as possible and make the most of the allowances and products available. With careful planning and regular contributions, you can help secure your child’s financial future.

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