295,000 junior ISA accounts opened in first full tax year 2012-2013
If you’ve got children, it’s natural to want to plan ahead for their future – to help them pay for education, their first home, a gap year, or other major expenses. Until recently, Child Trust Funds were one of the most widely-publicised options. Launched by the Government in 2002, families received up to £500 in public money to invest per child. However, this programme was scrapped in 2011 with the cost of the Government contribution proving too heavy.
Modelled on their better-known adult counterparts, Junior ISAs were launched in November 2011. Currently, parents, grandparents, relatives and friends can deposit up to £3,720 a year in a junior cash ISA, a junior investment ISA, or a mixture of the two. All growth and interest earned is tax-free.
Junior ISAs have proved popular with savers so far – certainly, they’ve shown a greater take-up than child trust funds, which in many cases languished untouched after the initial Government contribution. In fact, only around 20% had additional deposits made.
In the first five months after Junior ISAs were launched, over seventy thousand accounts were opened. By the end of their first full tax year of operation a further 295,000 accounts had been started. More than 1,000 Junior ISA accounts are opened each day in the UK – a major contrast to the lack of uptake which affected child trust funds.
It’s not just the uptake of junior ISAs that has beaten that of child trust funds – the average contribution made per child is higher, too. The average amount put into junior ISAs is £1,327, since they launched in November 2011. By comparison, an average of just £314 was saved in child trust funds, with only one in five children benefitting from additional contributions.
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