Junior ISA subscriptions see 27% annual boom

New market analysis by peer-to-peer real estate investment platform, easyMoney, reveals that Junior ISA subscriptions have increased by 26.9% in the past year, and total savings have hit an all-time high as more and more parents look to provide for their children’s futures in uncertain economic times.

easyMoney has analysed ISA savings data between the financial years of 2011/12 through to 2021/22 (the latest available data) to see how the number of Junior ISAs, formerly known as Child Trust Funds (CTFs), and the amount of money being saved within them, has changed over time.

What is a Junior ISA?

CTFs were long-term tax-free savings accounts for children born between 1st September 2002 and 2nd January 2011. When austerity measures began in 2011, resulting from the global financial crisis, CTFs were scrapped and parents were instead offered Junior ISAs as a way to save money for their children’s future.

The Junior ISA offers tax-free savings for children under the age of 18, with the 2024-25 annual allowance coming to £9,000. A Junior ISA can take the form of a cash ISA or a stocks and shares ISA, and must be opened by a parent or legal guardian. Once in the ISA, the money belongs entirely to the child who can take personal control of the account from the age of 16, but cannot withdraw any funds until they turn 18.

The number of Junior ISA subscriptions is on the rise

In 2021/22, provisional data shows that there were 1.212m Junior ISA subscriptions in the UK.

This marks an annual increase of 26.9% compared to 2020/21, a rise which coincides with the moment that the Bank of England started to raise interest rates in December 2021.

It’s interesting to observe that this large annual increase was largely driven by stocks and shares ISA subscriptions which increased by 65.5% on the year, while cash ISAs increased by just 10.3%.

The latest subscription figures also mark a massive ten-year increase of 1,607% since the Junior ISA was first introduced in 2011/12.

Total Junior ISA savings hit all-time high

easyMoney’s analysis also shows that the amount of money being put into Junior ISAs has increased significantly.

In 2021/22, total Junior ISA savings totalled just under £1.5 billion. This is the highest it has ever been and marks an annual increase of 20.3%. It also marks a ten-year increase of 1,196%.

Once again, stocks and shares ISAs are driving the increase with total savings rising by 36.6% on the year, while the total invested into the cash ISA option is up just 3.4%.

Jason Ferrando, CEO of easyMoney said, “When we feel uncertain about the strength and security of our personal financial situation, it’s common to look towards the future and think, how can I make use of the money I have today to ensure I am comfortable in the future? The same applies to our children – we are keen to do what we can to make sure they have some savings to use or build on once they enter adulthood.

Add this to the fact that interest rates have been rising and it’s clear to see why more and more parents have been putting money into Junior ISAs.

However, in the modern world, children don’t only need financial assistance from parents when they’re young, with many parents choosing or needing to continue supporting their clan well into adulthood, especially when it comes to things like purchasing a home.

So if your kids are already over 18 and therefore ineligible for a Junior ISA, there are other ISA avenues that you can explore. Innovative Finance ISAs are a great option because they offer strong rates of return and sidestep the traditional financial institutes that are so vulnerable to the economic shocks and uncertainty that have become commonplace in our modern world.”