The Government and banks will be launching Junior ISA’s on the 1st November this year. This is a new tax free way for parents to start saving for their children’s future, designed to replace child trust funds which were withdrawn as of 3rd January 2011.
There will be two types of Junior ISA available, a cash account and a stocks and shares account. Children who do not already have a child trust fund will be eligible to have one of each at any given time.
May of the same rules as child trust funds continue to apply to the junior ISA, the account will be in the child’s name, they will be able to take responsibility for the account at the age of 16 and enjoy full access to the money at the age of 18.
A maximum of £3,600 from all sources can be paid into a junior ISA each year, any money generated by the account will be tax free. On the child’s 18th birthday the account will automatically become a standard ISA, in their name and at their disposal.
A competitive range of junior ISA’s is expected to be offered by high street banks, building societies, credit unions and stock brokers. More information will be made available when the first junior ISA’s hit the market on 1st November 2011..