So, after Year 3, assuming your funds yielded at least 5% per annum, you will have made a profit of £620.25 in compound returns. The extra money you made on your notional amount, is free of capital gains tax (literally meaning the tax on your gains, aka £620.25) and the entire amount of £6,620.25 can be taken out without you incurring any taxes at all.
Parents AND grandparents each can give you and your siblings a total of £3,000,00 tax free every year. If you have two siblings, you could each receive £1,000,00 from both your parents and your grandparents. Other family members and godparents can gift £250,00 a year tax free.
Before opening an ISA anywhere, and everyone and their dog offer ISAs, do look at the fees the various ISAs charge, both for being on the platform and for buying and selling stocks or index funds. Those seemingly low fees such as a 0.50% platform fee and/or a 1% transaction fee do eat away quite substantially at your alleged yield of 5%. Look at all the fees and costs for holding an ISA, as if you were Sherlock Holmes, also at the more hidden ones, and then make your calculations to decide which platform/bank has the best deal for you. Some ISAs also offer a £25,00 sign-up bonus, which does sounds attractive. In that case, do make sure you are not paying this back via higher fees than other platforms and that the £25,00 gift is in fact a gift.
Having a junior ISA can be very rewarding. Searching for the right one will take a bit of time and might be a tat boring, but then imagine getting that lovely lump sum on your 18th birthday; it will all have been worth it.