Answers to your most commonly asked Junior ISA questions.
What are JISAs?
Junior Individual Savings Accounts (JISAs) are tax efficient savings schemes in two separate components, Stocks and Shares (SAS) and Cash Account. We offer a Stocks and Shares JISA that also allows you to hold cash as part of your investment strategy. Investments in a JISA are free of capital gains tax.
Who is eligible to open a Stocks and Shares JISA?
Anyone under the age of 18 who does not have a Child Trust Fund (CTF) and are resident in the UK for tax, or are Crown employees and spouse serving overseas.
If a CTF has already been opened can it be transferred to a JISA?
Yes. However, features in a CTF such as minimum subscriptions and annual charge cap of 1.5% may not be included in the JISA. Please see the Transfer Form to transfer a CTF to a JISA.
What type of JISA can be opened with Pilling & Co?
You can open a “execution only” stocks & shares JISA or “managed” stocks & shares JISA.
Who chooses the Investments?
If you have selected our execution only option, you do. We try to make sure the investments you choose for your JISAs are allowed. However, we do not accept any tax consequences and/or liabilities of any kind should we later find that, whatever the reason, you have chosen non-qualifying or unsuitable investments. If you select the Managed option we choose the investments under a discretionary management agreement.
What are the tax benefits?
You pay no capital gains tax on investments in the JISA. Any dividend income received is also free from further tax and the income from the child does not count towards the parents income.
How much can be invested in an JISA each year?
You can subscribe up to £9,000 into JISAs in the current tax year. This whole amount can go into either a Stocks and Shares (SAS) JISA or a Cash JISA, or you can split the annual subscription between the two types of JISA, providing you do not exceed the limit. Only one SAS JISA and one Cash account JISA can be subscribed to in any given tax year and only one SAS and one Cash JISA can be held by a child throughout childhood, as such you can only contribute to a Pilling SAS JISA if you do not hold another SAS JISA with another provider. You can use different providers for the two components.
How can these contributions be made?
Contributions can be made by cheque, bank transfer or direct debit. You can contribute a lump sum or by monthly instalments. The minimum payment is £10 although investing this amount each month in an Execution Only JISA is not cost effective due to commission charges. If you choose to open an Execution Only JISA you should consider building up a larger cash balance before investing.
What can be bought in a Pilling “execution only” JISA?
You can buy Qualifying shares officially listed on any recognised exchange. AiM shares, qualifying Investment Trusts, Unit Trusts, Open Ended Investment Companies and UCITS are allowed. You can also buy Gilts, Permanent Interest Bearing Shares (PIBS), Bonds, Convertibles and Preference shares. Extra charges may apply to some overseas stocks so you should check with us before dealing.
What’s excluded from JISAs?
Shares on the Aquis quoted market, Options, Futures, Nil-Paid Shares and Warrants and shares in unquoted companies are excluded.
Can the investments be bought and sold within the JISA?
Yes. If you select the execution only option, you can trade as often as you wish, simply ring our team of dealers who will be pleased to assist you on 0161 832 6581.
How do you confirm deals?
If you are registered for Client Web Access (CWA), an email is sent to you informing you that a contract note is on your CWA account for you to view. Alternatively, a contract note is posted to you for every deal showing price, commission etc. If you do not have a contract note, or the contract you have received is incorrect please tell us without delay and at least within 2 business days. Regardless of cause, we can accept no financial liability for missing or incorrect contract notes unless brought to our attention within 10 business days of the original deal(s).
Can other JISAs be transferred to Pilling?
Yes, we make no charge to receive JISAs from other managers. You should check if your manager makes a transfer penalty. You may transfer all of your existing SAS JISA or all/part of a Cash JISA to us (see JISA Transfer Form).
Can shares already owned be transferred into the JISA?
Yes. We have to sell the shares and then buy them back into the JISA. This is known as a “Bed and JISA”. Before we can do this we need to be in receipt of your shares which can be supplied to us as either share certificates and signed CREST transfers or via electronic transfer. You may also buy different shares in the JISA from those you sell. N.B. These transactions will be deemed a gift to the child and cannot be later taken back (see Charges).
“Bed & JISA” – any special costs?
As “arm’s length” deals, you pay the market-maker’s “turn” – i.e. the spread between the selling and buying prices goes to the market-maker (we can often reduce this for you). You also pay 0.5% Government stamp duty on most purchases.
If the same holding is sold and then bought straight away in your JISA, you only pay commission on one of the trades. If you do not buy the same stock in the plan as the stock you are selling, then you also pay a nominal charge of £10 per sale.
Please note that Bed & ISAs are traded extended settlement of T+5 (trade date plus 5 days) rather than the standard T+2. This is because the stock is registered in your own name and must be delivered to allow the sales time to settle to pay for the purchases you are making. If the stock you are selling is already registered in our nominee then standard T+2 will apply.
Do you pay interest on cash?
Yes. Quarterly, we pay gross interest on your cash on a tiered system at rates fixed by Pilling & Co. Your cash is always held in accounts segregated from our own, and only in banks which are authorised and regulated by the FCA. We pay interest to your account after a variable administrative deduction. Our current rates are always available on request or can be viewed on our website here. Amounts of less than £1 are not credited.
How are dividends dealt with?
Dividends are credited to your account. If there is any tax due from interest payments from gilts for example, we will reclaim this from HMRC and add this to your account. Dividend income cannot be withdrawn from the JISA and paid to you. Dividends paid by cheque in foreign currencies are subject to a minimum cheque value of £100 applied by the processing bank. Foreign cheques over £100 are subject to a £28 bank fee.
Can the dividends be re-invested?
Yes. With the Pilling Dividend Re-investment Plan (“DRIP”), where possible all your net dividends are re-invested upon receipt back into the shares of the company paying the dividend. Our commission is only 0.5% (with no minimum). Simply elect on the application form for the “DRIP” scheme.
Can income be paid out of the JISA?
No. Not until the JISA becomes an ISA when the holder turns 18.
Can withdrawals be made from the JISA?
No. As above, not until the JISA becomes an ISA when the holder turns 18.
How are the investments registered?
Through CREST, where available, in our nominee “St Anns Square Nominees Limited” (SASNL). You are always the beneficial owner of the investments. They are never part of Pilling & Co’s assets nor, indeed, of the nominee company’s assets. There may be occasions when identical stocks are pooled together within Crest, or at another custodians, as one block under the title of SASNL. These cannot then be attributable to any individual client and ownership will be evidenced by an electronic bookkeeping entry at Pilling & Co instead of a physical certificate. In these circumstances you are warned, that in the unlikely event of an unreconcilable shortfall after the failure of a custodian, clients may share in that shortfall in proportion to their original share of the assets in the pool.
Are the investments secure?
Yes. Pilling & Co accepts absolute responsibility for St Anns Square Nominees Limited. Your investments are not only protected under the Financial Services Compensation Scheme (FSCS), but, with the security of Pilling clients in mind, we also maintain additional professional financial risks insurance to cover the changing level of turnover in our business. If your investments must be held by a third party, we will use our best endeavours to make sure that only recognised and well-respected financial institutions are used. There may be further risk with non UK based custodians because of different settlement, legal and regulatory requirements. In some cases dividend payments may be briefly held in a custodians overseas bank before payment is made to Pilling & Co. However, we do not accept responsibility for such third party safe custody obligations.
How do you deal with “Corporate Actions”?
We write to tell you of any action effecting your investments including conversion and subscription rights, takeovers and similar offers. We process any capital reorganisations, demergers etc. On the rare occasion we are not notified by the company, its registrar, CREST or our third party data provider of a Corporate Action (or are not provided with sufficient information in a timely manner) and as a result are unable to pass on the details to you, we will not be liable to you for any loss suffered.
You may only take up rights issues and open offers in a JISA if you have cash in the plan, or can add new cash to a JISA. If you do not have enough cash, then the funds must be raised inside the plan. Where investments are pooled, entitlements are allocated on a “pro rata” basis and are rounded down to the nearest whole unit.
You must give your clear instructions direct to the Pilling ISA Department or by email to firstname.lastname@example.org by the requested date, or we can accept no responsibility whatsoever for any resulting losses or liabilities.
Can the JISA be borrowed against?
No. You must always remain the beneficial owner of your ISA investments. They may not be used as security for a loan.
When are valuations and statements produced?
In January, April, July and October each year, we provide you with a statement and valuation on Client Web Access (CWA). You will be able to view your valuations on line as often as you wish once you have registered to do so. If you are not registered for CWA, simply email your account numbers to us at email@example.com and we will send you instructions and a password. These are also available in paper form by request.
How is the CWA facility opened?
Simply send an email detailing the account name and number to firstname.lastname@example.org requesting to join CWA. You will be issued an exclusive login and password.
Can you send Company Reports and Accounts?
Yes. We can arrange this but, to keep down costs, we suggest you get these from the Company Registrars direct. They are also usually available on the company websites.
Does the JISA have the same rights as an ordinary shareholder?
Yes. By negotiation, for UK assets we can arrange for you to attend company meetings, to vote and to receive any other relevant information that is sent to share or unitholders direct.
The European Securities and Markets Authority (ESMA) introduced a new directive for Shareholder Rights under which Pilling & Co is required to notify you in relation to forthcoming General Meetings on your European assets (excluding assets based in the United Kingdom). If we were to implement the directive, it would drive up costs resulting in significant administration fees being passed onto you.
Therefore we have decided to opt out of the requirement. As we will not be offering this service, if you do not wish to opt out and wish to receive future General Meeting notifications and/or vote on your European asset(s), you will have to transfer the respective holding(s) to a provider who offers proxy voting services.
Can the JISA be “voided”?
Yes. We regret that if your plan fails the provisions of the JISA Regulations, it may have to be cancelled (“voided”) and we will tell you as soon as possible. However, this is a rare occurrence and we make every effort to ensure this does not happen.
Does Pilling administer its own JISAs?
Yes. All our JISAs are administered “in-house” by our own staff and we never delegate our JISA role to a third party.
Can I transfer my Pilling JISA to another provider?
Yes, upon receipt of your new JISA providers signed transfer form we will transfer either a Managed or Execution Only JISA to the new manager of your choice. However, we will only transfer a Managed JISA in the form of cash so the investment(s) will have to be sold (see Charges).
Can the investments be sold without my permission?
We reserve the right to sell or realise any investment which we are holding (or entitled to receive) on your behalf in order to meet any liabilities you may have incurred to us. Our right to sell any such investment will arise immediately upon default by you in making payment of any amount due to us and in that event we are entitled to sell or dispose of all or any part of such investment (whether these be investments in respect of which the default arises or any other investments for the time being held by us or which we are entitled to receive on your behalf) after expiry of any statutory notice period.
We shall not be liable to you in respect of any loss arising nor in respect of any choice made by us in selecting the investments to be sold. We will apply the proceeds of sale (net of costs) in or towards discharge of your liabilities to us and will account to you for the balance. In the event that such proceeds are insufficient to cover the whole of your liabilities to us, you remain liable for the balance.
We shall be entitled, without further reference to you, to buy any investment in the market to close any short position created by you and then, subject to any statutory notice period, sell or dispose of any other investments held by us or which we are entitled to receive on your behalf to satisfy in whole or in part the sums due on settlement of any such purchase and its associated costs. We shall not be responsible for advising you about the investment merits of any transactions effected by us pursuant to this section which in all cases will be treated as execution only deals.
What happens when the holder is 18?
On their 18th birthday the child can access the savings and make withdrawals from the (former) JISA. Any savings in the account that are not immediately withdrawn will automatically be transferred to an adult ISA with us and the same tax advantages will apply.