The Junior ISA (JISA) yearly limit is expected to be raised and confirmed to be £3,600 when it is planned to go live in November 2011. This is a 20% increase from the original £3,000 originally announced. We are also lead to believe that the limit for Child Trust Fund (CTF) will also be increased to £3,600.
The final rules are expected next week on Junior ISA investment limits per year. It is not expected that there will be a change to the eligibility criteria; starting a Junior ISA will only be available to those children who don’t have a CTF, ruling out children born between September 2002 and December 2010.
The risk of Junior ISAs is that children with CTFs are placed at a disadvantage to those who can invest in Junior ISAs. Concerns have been expressed by some that it could create a 2 tiered system.
All 800,000 children born in a typical year and those excluded by their birth dates from CTFs will be eligible for the Junior ISA tax shelter. Earlier in 2011, Mr Hoban said: “Junior Isas are a great example of a simple, clear and jargon-free financial product that allows families to save and invest for their child’s future.
“They allow parents and family friends to contribute to children’s savings and will strengthen the savings culture.”
No statistics were available according to a Treasury spokesman said about number of those who are less than 18 currently pay any tax on their savings. The personal allowance of £7,475 in each financial year applies to everyone including children.
The Treasury spokesman 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.”
Junior ISAs (JISAs) investments, are expected to be available from high street banks, building societies, investment companies and friendly societies from 1 November. The accounts will not release any of the investment until the child is 18.