New tax-free savings account for children
Financial Secretary to the Treasury, Mark Hoban, has announced that the Government will create a new tax free children's savings account. The new account, described as a ‘Junior ISA', will offer parents a simple and tax free way to save for their child's future.
The Government will now work closely with stakeholders to finalise the structure of the accounts, and intends for the new accounts to be available by autumn 2011.
The Government is committed to encouraging saving for children, within the constraints of the public finances. Following an informal consultation with a range of stakeholders, it is clear that there is an appetite for families to have a clear, simple and tax-free savings option for their children, following the end of Child Trust Fund eligibility from January 2011.
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 adulthood
Investments will be available in cash or stocks and shares
Annual contributions will be capped
There will be no Government contributions into the account
Mark Hoban said: "I am committed to ensuring that all parents can save for their children's future in a simple and straightforward account. The introduction of this new account means that we can still offer people a clear way of saving for their children, while saving the half billion pounds a year that we currently spend on Child Trust Funds".