Individual Savings Accounts for children or Junior ISAs were introduced in November 2011 replacing Child Trust Funds. They are long term, tax-free savings accounts for children who

• are under 18
• live in the UK
• are not entitled to a Child Trust Fund account.

A child cannot have a Junior ISA as well as a Child Trust Fund account, however, a Junior ISA can be opened and the trust fund transferred into it.

There are two types of Junior ISA, a cash Junior ISA and a stocks and shares Junior ISA and a child can have one or both types at any one time but the total annual amount which can be paid into either or both combined (if they have both) is £4,128.

If the child is under 16 the account must be opened by someone with parental responsibility, e.g. a parent or step-parent, who then becomes the 'registered contact' and the only one who can change the account or provider. They should also keep all paperwork and report on any change of circumstances.

Anyone can put money into the account (providing the annual limit is not exceeded) but only the child can take it out and only then when they are 18. If they choose not to take it out or invest it in a different type of account then the Junior ISA will automatically become an adult ISA.

The money in the account can only be withdrawn before the child is 18 under two conditions:-

• The child is terminally ill, in which case the 'registered contact' can take the money out
• The child dies, in which case the money will be paid to the person who inherits the child's estate.