Parents have been told there is a £29,000 Isa hack they could be missing (Image: Getty)
A money expert has explained how people can massively increase their ISA allowance – by £9,000 for one year. Antonia Medlicott, the founder of the personal finance site Investing Insiders, writing in the Times, explained that she was carrying out research when she found something which ‘stopped me in my tracks’.
Individual Savings Accounts (ISAs) are tax-efficient accounts for UK residents aged 18+ to save or invest up to £20,000 per tax year (as of 2026/27) without paying tax on interest, income, or capital gains. They act as a “wrapper” protecting returns from UK tax, with options including cash, stocks and shares, or lifetime ISAs
Ms Medlicott said the circumstances happen when you have a child who is turning 18. She said: “I came across something that stopped me in my tracks. In the tax year a child turns 18, their family can pile up to £29,000 into ISAs, more than in any other year of their life.”
She said that the Junior ISA has an annual allowance of £9,000. By comparison the adult ISA has an annual allowance of £20,000. She added: “Most of the time these are completely separate, but in the tax year that a child turns 18 both allowances apply and they don’t cancel each other out.
“That means up to £9,000 can go into the Junior ISA before the child’s 18th birthday, and then up to £20,000 can go into an adult ISA on or after that birthday. In one tax year £29,000 can be sheltered from capital gains tax and income tax, legally, within the ISA wrapper.
“Many parents saving into a Junior ISA assume the allowance simply converts to the standard £20,000 adult limit when their child turns 18. The allowances actually stack, and this is an important factor for parents to consider. The year a child turns 18 is when grandparents often want to make a significant financial gesture — for university, for a flat deposit, or for a head start in adult life. This is the year to do it most tax efficiently.”
She added that allowances can only be used in that tax year, they can’t be carried forward. The Junior Isa allowance must be used before the child’s 18th birthday. The adult Isa allowance applies from that date. After April 5, any unused allowance from that tax year cannot be reclaimed, and the £29,000 opportunity is lost.
The £9,000 Junior Isa allowance and the £20,000 adult Isa allowance both apply in the 2026-27 tax year, and HMRC has confirmed both limits will be frozen until at least 2030, although the cash Isa allowance is being cut to £12,000 from next April for under-65s. So the £29,000 maximum is fixed for the foreseeable future, which gives families with younger children time to plan.
A Junior ISA is a long-term, tax-free savings or investment account for children under 18 in the UK. Parents or guardians can save up to £9,000 per tax year (2026/27) without paying tax on interest or returns. Funds are locked in until the child turns 18, at which point they gain full control.
Earlier this year it was revealed that almost nearly one million Junior Isa accounts received no top-ups in the year 2023-24, according to figures from HM Revenue and Customs (HMRC). The figures were analysed following a freedom of information (FOI) request on behalf of Nottingham Building Society, which said around two in five Junior Isas had no money added to their account over the entire year in 2023-24.
It found that around 967,000 Junior ISAs (JISAs) received no contributions in 2023-24, up from 869,000 in 2022-23. HMRC also said there were 2,367,000 Junior ISA accounts in 2023-24, up from 2,167,000 in 2022-23.
The number of Junior ISAs with no contributions in a given year has grown at a faster percentage rate than the number of Jisas in existence, the building society found, indicating a widening gap between intent and action. The figures may reflect families grappling with cost-of-living concerns. Between 2020–21 and 2023-24, the total number of Jisas has risen by 37%, while the number of accounts receiving no contributions in a given tax year has jumped by 45%.
Some 78,000 JISAs received the full £9,000 subscription in 2023-24, representing around 3% of the total number of Jisa accounts. Nearly three-quarters (73%) of JISAs had less than £500 deposited in them during the year 2023-24 and 92% received deposits of less than £2,500.
Harriet Guevara, chief savings officer at Nottingham Building Society, said: “Junior ISAs are meant to help families build a financial head start for their children, but these figures suggest a growing number of accounts are effectively sitting empty – and that’s a warning light.
“When around two in five ISAs receive no contributions in a year, it points to the real pressure families are under. The data suggests that many parents are opening accounts for their children with all the right intentions, but that day-to-day costs are crowding out long-term saving.
“Child savings should not be something only a small minority of people can fully use. The priority should be making it easier for families to contribute what they can – little and often – and ensuring the system supports genuine financial resilience, not just high contributions.”
