Child Trust Fund vs Junior ISA – What’s Better in 2025?
If your child was born between 1 September 2002 and 2 January 2011, they likely have a Child Trust Fund (CTF). With the introduction of Junior ISAs in 2011, many parents are now wondering whether to switch. This guide compares the two in 2025 and explains how to decide which is best for your situation.
What Is a Child Trust Fund?
A CTF is a long-term, tax-free savings account for children born in the eligible window. The government provided a voucher (usually £250 or £500 for low-income families) to start the fund. You can contribute up to the annual allowance each tax year, and the money is locked in until the child turns 18. CTFs can be in cash or invested in stocks and shares.
What Is a Junior ISA?
A Junior ISA (JISA) is a tax-free savings or investment account for children under 18. Anyone can contribute — parents, grandparents, relatives — up to £9,000 per tax year (2025/26). Funds are locked in until age 18, after which the account becomes an adult ISA in the child’s name.
Key Differences in 2025
| Feature | Child Trust Fund | Junior ISA |
|---|---|---|
| Eligibility | Born 1 Sep 2002 – 2 Jan 2011 | All UK children under 18 (since 2011) |
| Annual allowance (2025/26) | £9,000 | £9,000 |
| Account options | Cash or Stocks & Shares | Cash or Stocks & Shares |
| Interest/investment returns | Often lower, especially for cash accounts | Typically higher rates or wider investment choice |
| Provider choice | Limited — many providers no longer promote CTFs | Wide choice of banks, building societies, and investment platforms |
| Transfer allowed? | Yes, into a Junior ISA | No transfers into a CTF |
Why Switch to a Junior ISA?
CTFs have become outdated, and many pay low interest rates or have high fees. By transferring to a Junior ISA, you can:
- Get a better interest rate or investment growth potential
- Choose from more providers and products
- Manage the account online or via an app
- Reduce fees on investment accounts
Example: Potential Difference Over Time
If your child has £5,000 in a cash CTF earning 2% interest, after 5 years it would grow to about £5,520. In a Junior Cash ISA earning 4%, the same money would grow to around £6,080. Over many years, the gap becomes even larger, especially if invested in stocks and shares.
How to Transfer a Child Trust Fund to a Junior ISA
- Find a Junior ISA provider that accepts CTF transfers (most do).
- Open the Junior ISA and complete their transfer form.
- The new provider will contact your current CTF provider to arrange the transfer.
Important: Do not withdraw the funds yourself, as this will lose the tax-free wrapper. Always use the official transfer process.
When the Child Can Manage the Account
From age 16, the child can take over managing their CTF or Junior ISA. However, they cannot access the money until they turn 18. At 18, the account automatically becomes an adult ISA in their name, and they can withdraw or continue to save tax free.
Which Is Better?
For most families, a Junior ISA offers better returns, more choice, and easier management. If you still have a CTF, check the current interest rate or investment performance. If it is poor, transferring to a Junior ISA could help the money grow faster.
Quick FAQs
Is there a cost to transfer?
No, there are no government charges to transfer. Your provider should move the full balance without penalty, although some investment accounts may have exit fees.
Can I add more money after the transfer?
Yes, you can contribute up to the annual £9,000 Junior ISA limit each tax year.
Can I split between cash and investments?
Yes, you can open one Cash Junior ISA and one Stocks & Shares Junior ISA for the same child, as long as total contributions stay within the £9,000 limit.