Draft regulations concerning the introduction of a new type of tax-free children's savings account have been published. The new accounts will be known as Junior Individual Savings Accounts (Junior ISAs) and are expected to be available from 1 November 2011. Comments on the draft regulations can be made until the end of May. The Government intends to make the final Regulations in July 2011.
The new savings accounts have been introduced to encourage children to save money and will go some way in making up for the phasing out of the Child Trust Funds to save the Government some £500m per year. However, the new savings accounts will be run by private providers and the government will not contribute any public funds.
The new account will have the following key features:
- All returns will be tax free.
- Funds placed in the account will be owned by the child and would be locked in until the child reaches 18 years of age.
- Investments will be available in cash or stocks and shares.
- Annual contributions will be capped at £3,000 per year.
- Junior ISA accounts will by default become adult ISAs on maturity.
- All UK resident children who do not have a CTF will be eligible for Junior ISAs.
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Published by The NAS News Team
