Rural families invest in junior ISAs ahead of inheritance tax changes
9th June 2025
Insurer NFU Mutual has noticed that rural families are increasingly choosing to invest in junior individual savings accounts ahead of proposed changes to inheritance tax.
The numbers of new stocks and shares Junior ISAs (JISAs) opened with NFU Mutual in the first three months of 2025 rose by 115% compared to the first quarter of 2024, the insurer said.
The number of existing stocks and shares junior ISAs which have had additional funds added also almost doubled in the same period.
NFU Mutual said that the average sums invested rose from £2,400 for new junior ISAs in the first three months of 2024 to £4,100 in the first quarter of 2025. The number of one-off top-ups to existing ISAs have also risen from an average of £2,700 to £3,900 in the first quarter of 2025.
The renewed focus on junior ISAs comes after the government’s 2024 Autumn Budget, which revealed plans to reform inheritance tax, including changing agricultural property relief and proposing that unspent private pension wealth should be counted as part of an estate for inheritance tax purposes from April 2027.
This is likely to have prompted more people to re-examine their finances so they can avoid a large inheritance tax bill for their families – with some spending more money now or gifting money to their children and grandchildren, the insurer explained.
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‘Investing for a child’s future’
The government confirmed in its spring statement that it “is looking at options for reforms to Individual Savings Accounts that get the balance right between cash and equities to earn better returns for savers, boost the culture of retail investment and support the growth mission.”
David Nottingham, personal finance expert at NFU Mutual, said: “More and more of our rural customer base are turning to junior ISAs with parents and grandparents using them as a tax-efficient way to invest for a child’s future – particularly as they are considering the implications of proposed inheritance tax changes.
“The junior ISA allowance more than doubled in 2020 to £9,000 each year, and since then there has been extra interest in the savings product, which has enabled families to shelter more from HMRC.”
“Junior ISAs are a great way to save for a house deposit or university fees in a tax-efficient environment, but many families are missing out on potentially higher long-term returns by sticking with cash-based junior ISAs rather than investing in a stocks and shares ISA.
“The majority of junior ISAs are not invested in stocks and shares, as many families prefer to play it safe and keep money in cash savings.”
Junior ISAs must be set up by a child’s parents or guardians, but once open, anyone can contribute up to £9,000 per year tax-free. No money can be withdrawn until the child turns 18, but they can take control of the account when they reach 16 years old.
The average national subscription to a junior ISA in 2022-2023 was £1,220, according to the latest government data, which also shows that £1.5 billion was subscribed to junior ISAs that year, of which around 42% was in cash.
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