UK families are being urged to utilise their children’s Junior ISA allowance before the end of tax year next week.

NFU Mutual suggested that this could help reduce tax bills and combat inflation for struggling families around the UK, after the mutual analysed figures that revealed Junior ISA amounts are on the rise.

The latest official figures show that the average amount invested into a Junior ISA each year stood at £1,133 in the 2020/21 tax year, the most recent data available, up from £949 in the year previously.

Over the same period, the amount invested into a Stocks and Shares Junior ISA climbed significantly from £1,180 to £1,665. Cash Junior ISAs also saw an increase in the average annual investments, from £846 to £913.

Personal finance expert at NFU Mutual, David Nottingham, commented: “Whether it’s for university fees or a house deposit, Junior ISAs are a great way to invest for a child’s future. Despite the impact of the rising cost of living, families continue to use them as a tax-efficient way to invest.

“With inflation likely to remain high, cash savings are likely to be eroded over time, but Junior ISAs invested in stocks and shares have the potential to beat inflation. Locked away until the child turns 18, families can weather short-term stock market volatility and benefit from the potential of compound growth to maximise returns.

“The fact that the Junior ISA allowance more than doubled in 2020 to £9,000 created extra interest and has enabled families to shelter more from the taxman.”

Families have until Wednesday 5 April to use their Junior ISA allowances for the 2022/23 tax year.

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