The savings limit on the new tax free Junior ISAs is to be set higher than previously announced.
The introduction of the new Junior Individual Savings Account (JISA) was announced earlier this year. Originally the government had indicated that the maximum amount which could be saved into a JISA would be £3,000 per year, however indications are now that this is to be raised to £3,600.
The JISA is designed to replace the Child Trust Fund (CTF) but would not receive government contributions as the CTF did.
Like the adult ISA the new JISA will be able to invest in bank or building society deposits or make stock market based investments.
It is anticipated that the JISA will be launched in November of this year with a move to combine the JISA and CTFs at a later date.
Under the original proposals any child born between September 2002 and January 2011 and therefore eligible for a CTF would not have been able to save into a JISA.
This was considered unfair as the interest rates on many CTF’s are unattractive.
After consultation it seems as though the government has changed the original proposal so all children, irrespective of when they are born will be eligible for a JISA.
The new JISA will be a tax efficient savings vehicle and whilst the majority of children pay no tax on their savings it is hoped that the JISA will provide children of all ages with an incentive to save.
A spokesman for the Treasury said. “The idea is to encourage saving over the long term and give parents and family members the confidence that, however much the JISA rolls up over 18 years, there will be no liability to tax.”