Savings and investments in a Junior ISA belong to the child whose account it is but the money is locked up and no withdrawals are allowed until they turn 18. At 18, the Junior ISA automatically matures into an ISA and the child becomes responsible for the account. They can then decide what to do with the money, whether for example to keep it invested, or withdraw some or all of it.
How does the Junior ISA maturity process work?
Here’s how the transfer of control from the registered contact to the child works:
- Between 1-2 months before the child turns 18, we will email the registered contact to confirm the child’s contact details and explain the process.
- On or shortly after the child’s 18th birthday, we will contact them, usually via email, to explain the process and the steps they need to take. These include registering on Beanstalk themselves, completing proof of identity checks and providing a few bits of additional information such as their bank details.
- Once their information is verified, we will transfer the account across to them. This is normally done within a week of them providing us all the information we require, but could take longer if we need any additional information. They can then access and manage the ISA through the Beanstalk app.
Until the child completes the process and takes over the account, the existing registered contact will still see the matured Junior ISA in their Beanstalk account. However the registered contact will no longer be able to make contributions or change investment allocations. Any regular contributions will be stopped.
What do children do with the money when their Junior ISA matures?
One thing some people are concerned about is the risk of the child just spending all the money once the account matures. Of course, at 18 it is their money and they are free to do with it what they would like but our experience is that this does not happen. The vast majority of young adults understand the value of what they have been given and what it has taken the parents and other contributors to put money aside.
What we have seen with Junior ISAs that have matured is that, for low value accounts with a few hundred pounds, the full amount is usually withdrawn relatively quickly but for larger value accounts, this is not normally the case, with some withdrawals being made but the child continuing to leave money invested for the future. Indeed we have some accounts where due to investment growth the value is as much as it was on maturity despite the child withdrawing money. Our advice is to discuss with the child their plans in advance of the account maturing.
Can parents withdraw money from a Junior ISA?
No – the money belongs to the child and except for exceptional circumstances such as if the child becomes terminally ill or passes away, it is locked up for them until they are 18.
What happens if the child is slow to take over the account?
At 18, the Junior ISA matures into an ISA but remains invested as it was before. No one can make additional contributions or withdraw from it until the young adult completes the take over process, but it will continue to benefit from investment growth. The registered contact will continue to see the details through their Beanstalk account until it is transferred to the child.
Can parents and donors still contribute to a matured Junior ISA?
Unfortunately not directly – HMRC rules only allow the account holder to contribute to an adult ISA, although donors can give the money to the young adult, so they can pay it in themselves. We automatically stop any regular contributions from parents and other donors when the child turns 18.