Child Trust Funds and Junior Individual Savings Accounts subscription limit changes from 6 April 2020
Published 12 March 2020
Who is likely to be affected
Those who are likely to be affected are:
- children with a Junior Individual Savings Account (Junior ISA)
- Child Trust Funds (CTF) account holders
- banks, building societies and other financial institutions who manage CTFs and Junior ISAs
General description of the measure
The measure amends the CTF and Junior ISA subscription limits from 6 April 2020. The annual CTF and Junior ISA subscription limit increases from £4,368 to £9,000.
Policy objective
The measure maintains the government’s support for savings for younger people.
Background to the measure
At Budget 2020, the government announced that the annual CTF and Junior ISA subscription limit would increase to £9,000 from 6 April 2020. Around 6 million children hold a CTF with an estimated value of over £7.4 billion in 2015-16. Around 907,000 Junior ISA accounts received subscriptions in 2017-18.
Detailed proposal
Operative date
The measure will have effect from 6 April 2020.
Current law
The rules for ISAs and Junior ISAs are set out in the Individual Savings Account Regulations 1998 (SI 1998/1870) (ISA Regulations), which are made under powers in the Income Tax (Trading and Other Income) Act 2005 and the Taxation of Chargeable Gains Act 1992.
The ISA Regulations specify the annual subscription limit for Junior ISA.
The rules for CTF, including the amount that can be paid into a CTF account are set out in the Child Trust Funds Regulations 2014 (SI 1450/2004) (CTF Regulations).
Proposed revisions
The ISA Regulations will be amended by the Individual Savings Account (Amendment No.2) Regulations 2020 to reflect the new subscription limits.
The CTF Regulations will be amended by the Child Trust Funds (Amendment No.2) Regulations 2020 to reflect the new subscription limits.
Summary of impacts
Exchequer impact (£m)
2019 to 2020 | 2020 to 2021 | 2021 to 2022 | 2022 to 2023 | 2023 to 2024 | 2024 to 2025 |
---|---|---|---|---|---|
- | negligible | negligible | negligible | negligible | negligible |
The measure is expected to have a negligible impact on the Exchequer.
Economic impact
The measure is not expected to have any significant economic impacts.
Impact on individuals, households and families
The measure is expected to have a positive impact by increasing the amount that can be saved into a Junior ISA and CTF. Customer experience is expected to stay broadly the same because individuals do not have to do anything differently.
The measure is not expected to impact on family formation, stability or breakdown.
Equalities impacts
This measure will have a positive impact on young people. It is not anticipated that the measure will impact other groups with protected characteristics.
Impact on business including civil society organisations
This measure is expected to have a negligible impact on around 130 ISA and CTF providers. One off costs include familiarisation with the new limit and adjusting their accounting systems to take account of the new CTF and Junior ISA subscription limit from 6 April 2020. It is not expected that there will be any on-going costs. There is no impact on civil society organisations.
Customer experience is expected to stay broadly the same because apart from the change to the annual CTF and Junior ISA limits there is no significant change to the operation of these savings accounts.
Operational impact (£m) (HMRC or other)
The overall additional costs for HMRC in implementing these changes are anticipated to be negligible.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
This measure will be kept under review through communication with affected taxpayer and provider groups.
For more advice
If you have any questions about this change, contact Hasmukh Dodia on telephone: 03000 512336 or email: savings.audit@hmrc.gov.uk.