The Financial Secretary to the Treasury, Mark Hoban MP, has today published draft regulations detailing the government’s new tax-free children’s savings accounts or ‘Junior ISAs’. It is expected that 6 million children will be eligible for the ISAs at launch, with a further 800,000 becoming eligible each following year.
The government welcomes views from relevant parties, but proposes for Junior ISAs to take the following form:
- Junior ISAs will be available from the 1 November 2011
- children will be able to have one cash and one stocks and shares Junior ISA at any time, with an overall annual contribution limit of £3,000
- the government will align the current Child Trust Fund (CTF) limit (£1,200) with this so that current CTF holders will benefit
- Junior ISAs will be offered by high-street banks, building societies, and any other providers that currently offer standard ISAs
- funds in Junior ISAs will be ‘locked in’ until the child is 18, and the accounts will then, by default, become adult ISAs
- the Chancellor has also confirmed that provisions will be made for looked after children (see details below)
Mark Hoban said:
Junior ISAs are a great example of a simple, clear and jargon-free financial product that allows families to save and invest for their child’s future. They allow parents and family friends to contribute to children’s savings and will strengthen the savings culture. I look forward to seeing these on the high street in a few months time.
Notes for Editors
The Financial Secretary announced that the government would create a new tax-free children’s savings account in October 2010. The original press notice can be found here: http://www.hm-treasury.gov.uk/press_57_10.htm
Full draft regulations can be found here: http://www.hm-treasury.gov.uk/fin_draft_reg_jr_isa.htm
The Chancellor confirmed during Treasury Oral Questions on 22 March 2011 that support would be available for looked after children through Junior ISAs. A transcript with further details can be found here: http://www.publications.parliament.uk/pa/cm201011/cmhansrd/cm110322/debtext/110322-0001.htm
Further details will be set out in due course.
The government will publically consult on the draft regulations until May 2011.
If the parent contributed the maximum amount over 18 years, the child could see resulting funds of up to £70,000 or £80,000.
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