Junior ISAs for children in care

Children who have spent time in local authority care often have a Junior ISA they know nothing about. The government pays £200 into a Junior ISA for children who have been in local authority care for 12 months or more and who are not eligible for a Child Trust Fund¹. The Share Foundation administers the scheme and acts as the registered contact for these accounts¹.

The account is a normal Junior ISA in the child's name. Up to £9,000 can be paid in for each child in each tax year, and the money belongs to the child³. It cannot be touched until the child turns 18, when the Junior ISA becomes an adult ISA and they can take the money out⁴.

If you are a care leaver and think you may have money in a savings account from your time in care, contact your local council⁵. Around two months before a child turns 16, the provider writes to them explaining how to take over the account themselves⁶.

The £200 government payment for looked-after children

The £200 payment is a one-off. It goes into a Junior ISA for children who have been in local authority care for 12 months or more and who are not eligible for a Child Trust Fund¹. It is not a savings scheme the child has to apply for: the account is set up on their behalf.

The distinction matters because Child Trust Funds and Junior ISAs do not overlap. A child cannot have a Child Trust Fund and a Junior ISA of any type at the same time⁷. If a child already has a Child Trust Fund, the whole balance has to be transferred into a Junior ISA before one can be opened⁷. The £200 payment is aimed at children who fall outside the Child Trust Fund scheme.

Junior ISAs themselves have been available since 1 November 2011 to children under 18 who do not own a Child Trust Fund account⁹. The scheme for looked-after children sits on top of that: the same account rules apply, with the government making the opening payment rather than a parent or guardian.

For anyone trying to work out whether a particular child qualifies, the test is time in care and Child Trust Fund eligibility, not the type of placement or who holds parental responsibility. If you were looked after for more than 12 months after 2 January 2011 and do not have a Child Trust Fund, you may have a Junior ISA⁵.

Who manages the account

For most Junior ISAs, a parent or guardian opens and manages the account while the child is under 16¹⁰. For looked-after children, that role falls to The Share Foundation, which acts as the registered contact for these accounts². The legislation treats the Share Foundation as having parental responsibility for the purposes of the Junior ISA rules covering looked-after children¹¹.

The registered contact is the only person who can change the account, for example from a cash to a stocks and shares Junior ISA, change the account provider, or report a change of circumstances such as a change of address⁴. That is a narrow but important set of powers: it does not give the registered contact any right to the money.

The child takes over at 16. If your child is 16 or older they can become the registered contact for their Junior ISAs⁴. Around two months before these children turn 16, the provider writes to them with information on how they can become the registered contact for their account⁶. From that point the young person can manage the account online, and the adult who previously ran it steps back.

Where a carer or adoptive parent has been granted formal parental responsibility, there is separate official guidance on how to take over management of a Child Trust Fund or Junior ISA account¹³. That route exists for people who have taken on the child's care permanently, rather than for the local authority.

Junior ISA allowance: up to £9,000 a year

The allowance for children's ISAs is £9,000 per child per tax year³. It is the same for both cash and stocks and shares Junior ISAs, and each child has their own allowance, separate from their parents' or guardians' own ISA allowances¹⁴.

That £9,000 is a ceiling on everything paid in for that child across their Junior ISAs in the tax year, not a target. The £200 government payment counts towards it, as does anything a foster carer, relative or family friend pays in. Parents and guardians can pay into Junior ISAs up to the limit, and what they pay in does not come out of their own ISA allowance, because the Junior ISA belongs to the child⁸.

Anyone can contribute. The rules describe subscriptions being made to a cash account, a stocks and shares account, or in any proportion between them, for the same named child¹². The money is a gift to the child: account managers must inform anyone proposing to make a subscription, other than the child, that the subscription is a gift to the child¹⁵. It cannot be reclaimed later, whatever happens to the relationship or the placement.

Cash or stocks and shares: how the account is invested

A child can hold two Junior ISAs: one cash and one stocks and shares¹⁶. Only one of each type may be held during the child's childhood, though accounts can be transferred to alternative account managers¹⁷. So the choice is not between one account and another, but how the money is split between the two types.

A cash Junior ISA works like a savings account with tax advantages. A stocks and shares Junior ISA invests the money, which means the value can fall as well as rise. The account will have tax advantages for the child, and also for parents who subscribe to their child's account¹⁸. A Junior ISA is a tax-advantaged savings product available to children²¹.

For a looked-after child's account, the investment decision sits with whoever is the registered contact at the time. The Share Foundation holds that role until the child takes it over at 16². Transfers between the two types are allowed: it is possible to transfer a Junior Cash ISA into a Junior Stocks and Shares ISA, and vice versa¹⁹. All or part of previous years' subscriptions, and all of the current year's subscriptions if those are being transferred, can move between the two types for the same named child²⁰.

At 18 the money belongs to the young person

Junior ISAs automatically turn into an adult ISA when the child turns 18⁴. The savings cannot be withdrawn until the child reaches 18⁹. Once the child turns 18, the Junior ISA account will be changed to an adult ISA, and the individual can decide what they want to do with the money⁸.

The money is the young person's, not the council's and not the carer's. All money paid into the account belongs to the child and is unlocked on their 18th birthday²². When the child turns 18, the account changes to an adult cash ISA in their name, with full access to all the money²².

Providers handle the mechanics differently. NS&I, for example, ends the Junior ISA on the child's 18th birthday and automatically transfers the money into an adult cash ISA, with notice about a month before⁷. The person looking after the Junior ISA is contacted about a month before this happens²³. Other providers transfer the funds to the young person directly²⁴.

There is one exception to the no-withdrawals rule. A registered contact may make a claim for withdrawals from a junior ISA account where the named child is terminally ill, and once a claim is accepted, withdrawals of any amount may be made at any time¹⁵.

What happens if the child already has a Child Trust Fund

A child cannot have both a Junior ISA and a Child Trust Fund, only one or the other²⁶. If a looked-after child already has a Child Trust Fund, the whole amount must be transferred into the Junior ISA before one can be opened⁷.

Child Trust Funds came with an initial government contribution and can be contributed to until the child turns 18²⁷. They have been replaced by Junior ISAs, but you can still continue to pay into a Child Trust Fund or transfer it to a Junior ISA²⁸. The Share Foundation manages Child Trust Funds alongside its responsibility for managing the Junior ISA scheme¹.

For a child in care, the practical question is which account they already hold. If it is a Child Trust Fund, the £200 payment does not apply, because that payment is for children who are not eligible for a Child Trust Fund¹. The route forward is a transfer rather than a new account. There is more on how that works in Child Trust Funds: what they are, what happens at 18 and how to claim and Moving a Child Trust Fund into a Junior ISA.

Can the Junior ISA be moved to a different provider?

Junior ISAs can be transferred between providers, but a child cannot have more than one of each type of Junior ISA at any one time¹⁶. A transfer moves the account rather than creating a second one.

Junior ISAs can be transferred in whole or, where the current provider allows it, in part¹⁹. Some providers only accept the whole balance: NS&I, for example, always transfers the whole amount of a Junior ISA balance⁷. It is also possible to transfer a Junior Cash ISA into a Junior Stocks and Shares ISA, and vice versa¹⁹.

The registered contact arranges the transfer, which means The Share Foundation while the account is under its management, and the young person themselves from 16⁴. The process normally starts with the new provider rather than the old one. There is a step-by-step account in How to transfer a Junior ISA.

Finding a lost account and where to get help

If you think you have money in a savings account from your time in care, contact your local council⁵. Councils hold the records of the accounts set up for children they looked after, and they can tell you whether a Junior ISA was opened and who holds it now.

The Share Foundation administers the Junior ISA scheme for looked-after children, and it is the body that acts as registered contact for these accounts¹. If a council cannot resolve a query, the foundation is the next point of contact. Around two months before a child turns 16, the provider writes to them with information on how to become the registered contact for their account⁶, so a letter arriving shortly before a 16th birthday is a strong signal that an account exists.

For anyone who has lost track of a Child Trust Fund rather than a Junior ISA, the search route is different. How to find a lost Child Trust Fund sets out how to trace one.

On benefits, money in a Junior ISA does not count as part of your income or savings when applying for benefits²⁹. In Scotland, savings for a child or young person who is looked after, whether in a junior ISA or another account, should normally be ignored in calculating savings for Scottish Welfare Fund purposes³⁰. There is more on how ISAs interact with means-tested benefits in ISAs and means-tested benefits.