Junior ISA or Child Trust Fund: which your child has, and what to do about it

The one-minute answer

Which one your child has is decided by their birthday. Children born between 1 September 2002 and 2 January 2011 were automatically given a Child Trust Fund (CTF) — the government opened one for every eligible child and paid in a voucher, whether or not the parents ever touched it. The scheme closed to new children in January 2011 and was replaced by the Junior ISA (JISA), which does the same job — tax-free saving that becomes the child's at 18 — but has to be opened by a parent or guardian. A child can hold one or the other, never both; a CTF can be transferred into a Junior ISA, but not the other way round.

Junior ISAs in a nutshell

• £9,000 a year can be paid in per child (2025/26 allowance — it has been frozen at £9,000 for several years; check each April). It's separate from your own £20,000 adult ISA allowance.
• Two flavours: cash, and stocks & shares. A child can have one of each, sharing the £9,000.
• Anyone can contribute — parents, grandparents, godparents — but only a parent or guardian can open the account and act as "registered contact".
• No tax inside the wrapper — no income tax on interest or dividends, no capital gains tax. Growth compounds untouched for up to 18 years.
• Locked until 18 (the child can manage — but not spend — the account from 16). At 18 it automatically becomes an ordinary adult ISA in their name.

The lock and the tax treatment are the point. Outside a wrapper, there's a rule that catches generous parents: if money you give your child earns more than £100 of interest in a year, all of that interest is taxed as yours, not theirs. Inside a Junior ISA the rule doesn't apply — which is precisely why the wrapper exists.

Child Trust Funds: the scheme everyone forgot

Around 6.3 million CTFs were opened, seeded with government vouchers of £250 (£500 for lower-income families, cut to £50 in the scheme's final months). Crucially, if parents never chose a provider, HMRC opened an account anyway with an allocated provider — which is why so many families genuinely don't know an account exists, or with whom. The first CTF children turned 18 in September 2020 and the last will in January 2029; HMRC's figures show hundreds of thousands of matured accounts still unclaimed, averaging roughly £2,000 each.

If your child (or you — the oldest CTF holders are now in their mid-twenties) might have a lost account: use HMRC's free find a Child Trust Fund service, which needs little more than a National Insurance number, or the Share Foundation's free tracing tool. Avoid the commercial "we'll find your CTF" firms that advertise heavily around results day — they charge a slice of the child's money for a search the official routes do for nothing.

Should you move a CTF into a Junior ISA?

Transfers have been allowed since 2015, the whole balance must move (the CTF closes), and a transfer doesn't count towards the year's £9,000 allowance. The case for moving is usually cost and choice: many CTFs sit in stakeholder accounts charging up to their 1.5% annual cap — several times what a modern platform charges for a simple global index fund — and legacy CTF providers tend to offer a narrow, dated fund menu. Over a decade or more, the fee difference alone compounds into real money; see the effect for yourself in our fee impact calculator.

The case for staying put is rarer but real: a few CTFs hold funds or terms worth keeping, and if the account matures within the next year or two the switch may not be worth the admin. The honest process is: dig out what the CTF actually charges, compare it with a couple of Junior ISA providers' all-in costs, and let the numbers decide. We don't recommend providers — that's a promotion we're deliberately not in the business of making.

Cash or stocks & shares for a child?

A Junior ISA opened at birth has an 18-year horizon — longer than most adults ever invest for. Over periods that long, diversified investments have historically beaten cash by a wide margin, and the year-to-year swings that make investing feel risky have time to wash out; the trade-offs are exactly the ones in investing basics. Cash starts to make more sense as 18 approaches and the money's job becomes short-term. To feel what 18 years of compounding does to regular contributions, run your numbers through the compound growth calculator — £50 a month from birth is a five-figure sum at plausible long-run returns.

Grandparents, godparents and the gifting angle

Anyone can pay into a child's JISA or CTF once it's open, and for grandparents it's a popular way to give: contributions are gifts like any other, so the usual exemptions do the work — the £3,000 annual exemption, regular gifts from surplus income, and the rest are covered in our gifting guide. One quirk worth knowing: the £100 parental-interest rule above applies only to parents — money from grandparents earns the child's own tax treatment even outside a wrapper. And for the truly long-sighted, a pension can be opened for a child too (up to £2,880 a year net, grossed up to £3,600 by tax relief) — locked away not until 18 but until their late 50s, which is either the feature or the bug depending on your view.

Common questions

About this guide: general education only — not regulated advice or a personal recommendation, and FinancialAdvisor.co.uk is not an FCA-authorised firm. Allowance figures are for 2025/26 — check each April. Related: ISAs explained and gifting money to family.