The Government has announced that a “Junior ISA” for children will be launched to replace the previous “child trust funds” which have been scrapped.
The new “Junior ISA’s” are likely to come into force in Autumn 2011 and information on them is limited at present.
The new ISA will be a simple and tax-free way for parents to save for a child’s future – the only difference being here that there will be no contribution made from the public purse!
It is understood the ISA will pass to the child on reaching 18 so could be a good way to build a tax-efficient fund for, say, university funding, house purchase or buying a home.
Remember: everyone has a personal income tax allowance – even children. For the 2010-11 tax year it is £6,475 – so if your children currently earn interest on their savings accounts (and their income from all sources if below £6,475) then they can register to receive their savings account interest paid gross with no tax deducted – here’s an article I wrote on this issue previously.
The details are to be confirmed soon but I would expect that a Junior ISA can be rolled over into an “adult” ISA once the child reaches 18 – it’s going to be a case of “use it or lose it”.
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