The WealthKernel Guide to JISAs
JISAs were launched in 2011 to give parents and families a tax incentive to form a future nest egg for children, helping them save for their future. JISAs replaced Child Trust Funds introduced by the Government in 2002.
We recently announced the integration of Junior ISAs into our API platform. The new functionality enables companies to flexibly offer JISA products to customers using WealthKernel’s APIs. Read on to find out more about JISAs and the benefits of using WealthKernel’s API to offer JISA services.
What are Junior ISAs?
Junior Individual Savings Accounts (JISAs) are long-term, tax-free savings accounts for children that parents and relatives can save or gift money into. To open a Junior ISA, a child must be less than 18 years old and must not have a Child Trust Fund. Unlike an ISA, the savings and investments in a Junior ISA can’t be withdrawn until the child reaches 18.
When the child turns 18, they take over the management of the account at which point the JISA becomes an Individual Savings Account (ISA). JISAs have become more popular in the past year after the British Government raised the annual tax-free allowance from £4,500 to £9,000 from April 2021.
Cash JISAs vs Stocks and Shares JISAs
- Savings accounts where any interest earned is tax-free
- Offered mainly by banks and building societies, interest is applied to the savings at a fixed or variable rate
Stocks and Shares JISAs
- Investment accounts for those that want to invest for the longer term and want tax-free investment income and gains
- Provides a range of investments options including funds, shares, investment trusts and exchange-traded funds (ETFs)
According to data from HMRC, JISAs have seen steady growth in popularity, since being introduced in 2011. In 2019-20, more than 1 million JISAs were opened, with 70% of parents choosing cash over a stocks-and-shares account.
You can choose to open one, or both of these types of Junior ISAs. If you choose both, your Junior ISA allowance will be split across the two accounts, but you have complete flexibility in how you use this. For example, you could choose an even 50/50 split between investments and cash, or you could choose to put 30% in cash and 70% in stocks, or vice versa.
A study by AJ Bell in 2020 recorded a surge in the number of people putting money into their children’s ISAs. From April to June 2020 there was a 113% increase in the number of people paying into a Junior ISA compared to the same period the year before.
There has also been an increase in the total amount people are contributing, up 127% in these three months of the year compared to 2019. Average subscriptions per account have risen 26%, from £1,853 to £2,326.
WealthKernel's JISA APIs
Our new JISA API allows clients to:
- benefit from a low-cost, easy-to-implement JISA - providing access to a government-approved investment savings product for their children
- build JISA functionality into investment products and services
- eliminate the need to build JISA infrastructure in house
- increase speed-to-market
- access thousands of funds, ETFs, stocks across US and European markets
Our automated approach enables any wealth manager or fintech to easily integrate JISAs while lowering the cost of offering exciting products to parents and families.
“...JISAs are a hugely powerful vehicle for parents and other family members to help set up the future of their children, and here at WealthKernel, we want to help enable this future by empowering the businesses offering these products…”,
Karan Shanmugarajah, CEO of WealthKernel
Hapi, a JISA service provider, is one of the first businesses to use our APIs to boost its investment offering for families. Through WealthKernel’s APIs, Hapi allows parents and other family members to contribute to, and invest in, their children's futures.
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