Parents are eschewing their own savings to open Junior Isas for their children

Parents and guardians have put aside opening Isas for themselves to prioritize opening Junior Isas for their children, new data shows.

Between October and December 2023, the number of Jisas opened by parents and guardians has increased by 101 per cent since 2019, according to exclusive data from Scottish Friendly’s This is Money.

It indicates that planning for future generations has become a greater priority for parents and guardians.

The shift in parents and guardians prioritizing saving for their children over themselves has resulted in a decline in Isa investments over the same period, the figures show.

Mums are leading the way when it comes to opening up new Junior Isas to children. Since the beginning of 2019, the number of new Jisas opened by mothers has increased by 115 percent.

The number of fathers opening a new Jisa for their children was up 87 percent in comparison.

The increase in Jisa investments was most prevalent among younger parents aged 18 to 34. The number of Jisas opened by parents in this age group has increased 35 times compared to 2019.

– View our table of the best Junior Isa rates here

The amount parents and guardians put into Jisas after summer 2023 also increased by 107 percent, despite continued pressure on living costs and the approaching Christmas period.

At the time, the best Jisa paid a rate of 4.7 per cent and was offered by Coventry Building Society, according to rates auditors Moneyfacts Compare.

The best Jisa rate is now 5.49 percent and is offered by Bath Building Society.

Every region in the UK saw an increase in the number of new Jisas opened by parents and guardians since the start of 2019.

But Scotland surpassed this with a 191 per cent increase, closely followed by the East Midlands, where the number of Jisas opened rose by 147 per cent.

Kevin Brown, savings specialist at Scottish Friendly, said: ‘It’s clear that saving and investing for children remains a top priority for families across the UK and more must be done where necessary to support and encourage this.

‘Recently the government has hinted that Isa reforms are on the way and we believe that changing the rules to allow other family members, such as grandparents, to also open Jisas would provide a much-needed boost to children’s savings.

‘Removing these restrictions can only help put children on a stronger financial footing as they mature and should therefore be strongly considered in any planned reforms.’

The new Isa age changes will come into effect in April 2024

As part of the Government’s package of Isa reforms, which comes into effect from April 6, 2024, there will be a change to the age at which you can open an Isa with cash.

Currently, you can open a normal adult cash Isa at the age of 16, while you must be 18 to open an adult stocks and shares Isa.

From the new tax year, you must be 18 years old to open a cash Isa or a stocks and shares Isa.

The Government says this will bring cash Isas in line with the age requirement that already applies to opening shares, innovative finance and Lifetime Isas.

Anna Bowes, co-founder of website Savings Champion, said: ‘This change means that young people at the age of 16 and 17 will miss out on up to £20,000 of money in Isa – effectively £40,000.

‘They are unlikely to have that much money themselves, so a parent may have gifted it to them.

‘But if that were the case, the parent might have to pay tax at their own marginal rate, even though any interest earned in the Isa would be tax-free for the child as they are gifted.’

Children’s savings accounts, including Jisas, are generally not subject to tax.

If a child receives more than £100 in interest in the tax year from money given by a parent into a savings account or Jisa, the parent must pay tax at their own marginal rate on any interest if it is above their own. Personal savings allowance.