Junior ISAs

Junior ISAs (Individual Savings Accounts) have been available since 1 November 2011, following the end of Child Trust Fund (CTF) eligibility from January 2011. The Treasury says that Junior ISAs will ensure that all parents have a clear and simple way to save for their child’s future.

They will initially allow parents, family members and friends to make tax-efficient savings of up to £3,600 annually per child.

In July 2011, after consultation with a range of interested parties (including potential Junior ISA providers, trade bodies, consumer groups and members of the public), the Government detailed Regulations, amending the existing Individual Savings Account Regulations, to provide for the establishment of Junior ISAs.

Junior ISAs will have the following key features:

  • All UK resident children under the age of 18 who do not have a CTF will b eligible for Junior ISAs;
  • Any income or gains will be tax-free;
  • Both cash and stocks and shares Junior ISAs will be available. Children will be able to hold up to one cash and one stocks and shares Junior ISA at a time (two accounts in total);
  • There will be an overarching contribution limit of £3,600 per year which will be indexed by CPI from 6 April 2013 onwards;
  • Accounts will be owned by the child and funds will be locked in until the child turns 18;
  • Childrenwill have the right to manage their accounts from age 16;
  • Junior ISA accounts will by default become adult ISAs on maturity.

A considerable number of existing savings scheme providers with ISA components are already actively promoting Junior ISAs, as they prepare for the November start.

If you want to find out more or need advice about ISAs and Junior ISAs, contact Damien Rylett.