Opening and managing a tax-efficient Individual Savings Account, or ISA, on behalf of another person is usually only possible if you’re saving for your child, or if you’re managing the finances of someone who has granted you power of attorney.

In other words, the person you are trying to open an account for must either be too young to manage their own finances, or have given you written permission to make legal decisions for them regarding their finances.

Read on to find out all the rules you need to know about opening an ISA for someone else.

What is an ISA?

An ISA is effectively a tax-efficient wrapper that shields your savings and investments from tax. You don’t need to declare any savings and investments held in an ISA on a tax return either.

There is a limit to the amount that you can pay into an ISA each financial year starting on April 6, with the limit for the current 2024/25 year being £20,000. You can’t carry over any unused ISA allowance to the next year, but it can be a really effective way of building up a tax-free pot if you can afford to make the most of the allowance each year.

You can read more about ISAs, their benefits, and the different types that are available in our guide Everything you need to know about ISAs.

How can I open an ISA for someone else?

In most cases, only the account holder can apply for and manage an ISA. Unlike some other types of savings accounts, you cannot open a joint ISA, meaning you won’t be able to share an ISA with anyone else.

Opening an ISA for a child or grandchild

If you want to save or invest for your child or grandchild over a period of several years, then you might want to consider paying into a Junior ISA (JISA) on their behalf. However, you’ll only be able to open a Junior ISA for them if you are their parent or legal guardian. If you aren’t – for example, you’re their grandparent – then their parent or guardian must open the account for their child, and you can then make contributions into it.

A Junior ISA works in a similar way to the adult ISA and allows you to save money for your child or grandchild without them paying income tax or capital gains tax on the interest or returns they receive.

The annual allowance for JISAs for the 2024/25 tax year is £9,000, which you can pay into a junior cash ISA or a junior investment ISA, or you can split the allowance between the two.

Money held in a Junior ISA can’t be accessed until your grandchild reaches the age of 18, at which point they can add to or withdraw from it as they would with any other ISA. However, they can start managing the account on their own from the age of 16.

Several investment companies offer ready-made investment Junior ISAs, including Fidelity, Moneybox, Vanguard and Nutmeg, or you can go for a DIY approach and choose the investments you want to hold. Providers of self-invested Junior ISAs include Hargreaves Lansdown, AJ Bell and Fidelity. 

There are also apps available which can help you build a nest egg for your children or grandchildren too. For example, Beanstalk has a Junior ISA with no minimum contribution limit. Friends and family can link to your account from their own app to top up your children’s savings pots and send you messages to let you know what the money’s for, for example, a Christmas or birthday present, meaning no more trips to the bank or queueing to deposit cheques.

Rather than offering a confusing range of investment options, there is a simple sliding ratio that lets you choose whether to invest more in cash funds or share funds. With the right ratio, if you start depositing £5 per month when your child or grandchild is born, by the time they are 18, they could have as much as £8,000 in savings, although it’s important to remember that the value of investments can fall as well as rise. If you want to access Beanstalk via its website, you can do so at Beanstalk, where you can also download Beanstalk for iOS and Android.

Find out about other options if you want to give a financial gift to a child or grandchild in our article Financial gifts for young children: what are the options?

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Opening an ISA for an adult

You might want to open an ISA for an adult, perhaps an older child or a parent, so you can protect their investment and savings returns from tax. The only way you can usually open an ISA for an adult other than yourself is if they have written a power of attorney, signed and registered by both of you. This is a legal certificate giving you the authority to act on their behalf. This is done to pass control of one’s affairs to a spouse, child or family member or close friend, generally in the event that they become seriously ill, involved in an accident, or lose mental capacity as they get older. The person giving power to someone else is known as the donor – the person receiving the power is known as the attorney.

For opening an ISA, the power of attorney must specify that you are responsible for the donor’s finances – some powers only grant you the right to decide on their medical care.

In addition to having acquired power of attorney, in order to open an ISA, the donor needs to be unable to make the application themselves due to a mental disability or incapacity, a physical illness or disability, or old age. In this case, you would need to have a particular power of attorney known as a Lasting Power of Attorney, or LPA. The “Lasting” part is what allows you to continue to make decisions for the donor permanently, even after they themselves become unable to. Read about how to set up a lasting power of attorney in our article How to set up a lasting power of attorney.

An ISA provider may also accept an application on behalf of someone who is in active service in a war zone. In this case, you would only need an ordinary power of attorney, as the donor is not technically unable to make the decision – they just can’t fill in the application form.

A person can only grant power of attorney to someone else if they are of sound mind at the time and have the capacity to make this significant financial decision. This means that you may not be able to acquire power of attorney from someone if they have already become severely ill or mentally deteriorated. If this is the case, you can apply to the Court of Protection for a financial deputyship order to open and manage an ISA for them.

Read more about being a deputy and how to apply at In Scotland, applications need to be made to the Office of the Public Guardian in Scotland. In Northern Ireland, applications need to be made to the Office of Care and Protection.

What documentation do I need to open an ISA for someone else?

You should expect the ISA provider to ask you for documentation to prove that you have power of attorney if you are trying to set up an ISA for someone.

There should be a written certificate, signed by the donor (the person you are acting on behalf of), the certificate provider (usually a solicitor), the attorney (you), any replacement attorneys and the person registering the application with the Office of the Public Guardian. This is the main document you will need to send to the ISA provider.

If they ask you for a physical version, make sure to photocopy it and give them the copy – it’s important to hold onto the original certificate yourself, as the ISA provider will need to keep the copy for their records.

You may also need to provide evidence that the donor is unable to make the application themselves, for any of the reasons listed in the previous section.

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