The government has published the final regulations for Junior ISAs. Both cash and stocks and shares Junior ISAs will be available from November 2011, with an annual contribution limit of £3,600.
Head of savings and investments at Fair Investment Company, Oliver Roylance-Smith, said: “With a higher £3,600 annual contribution limit than originally planned, people saving for their family will have a reasonable additional tax break, on top of their ISAs.
“As there aren’t many tax breaks available, the existing cash and stocks and shares ISAs provide a valuable way to save while avoiding tax liabilities.
“Junior ISAs provide a welcome extension of this tax benefit, specifically for a child’s future. We urge the industry to create an attractive range of products to help encourage the widest possible number of people to save for their children.”
“HMRC has reported that 5.789m Child Trust Fund accounts had been opened (at March 2011) since the launch of Child Trust Funds in 2002.
“Accessible and straight forward Junior ISAs will need to be available if the maximum number of the 6 million children estimated to be eligible for the accounts will benefit from them when they are launched.
“With Junior ISAs using the same framework as ISAs (qualifying investments for cash and stocks and shares Junior ISAs will be the same as for existing ISAs) this should enable providers to make a range of different products available.”
Referring to the decision not to allow Child Trust holders to transfer to Junior ISA accounts, Oliver Roylance-Smith said: “By not allowing Child Trust Fund holders to transfer to Junior ISAs there is a risk that a lack of competition will mean options remain limited for Child Trust Fund savings.
“Providers need to ensure there is a healthy competition for existing Child Trust Fund investments so those children who benefitted from government contributions are able to continue to grow those savings.”
© Fair Investment Company Ltd