Proposed new Junior ISA account/ November 2011

A consultation paper has now been issued to confirm the plans for the new tax efficient Junior ISA account, which is proposed to start from 01 November 2011 and will allow an overall annual contribution limit of £3,000 (proposed not for those without a Child Trust fund/CTF). Full draft regulations can be found at the HMRC website here: http://www.hmrc.gov.uk/budget-updates/march2011/junior-isa-regs.pdf

In part, the proposals for this style of new account is a replacement for the Child Trust Funds (CTFs) and their payments which were allowed for children born between 01 September 2002 and 02 January 2011. After that time, all government contributions to CTFs ceased. Also, any payments that would have been made to disabled and severely disabled children will be channelled to other kinds of support.

The value of the proposed new Junior ISA plan will be locked in for the beneficiary until they reach the age of 18 and then the account will become an adult ISA thereafter. It is anticipated that many of the current providers who offer adult ISA arrangements will expand their range to offer the new Junior ISA option. As with the current standard ISA regime, investment will be able to be made into a stocks and shares arrangement or into a cash /deposit type plan. It is planned that these new ISA limits will be confirmed once the consultation in May 2011 is complete.

Many parents and grandparents may find this of interest for future family savings. We are all different and the needs for saving (both for yourself and for children/grandchildren), retirement, investment or pension planning, as examples, will vary, dependent on your individual requirements. Therefore, this article should not be seen or used as individual advice.

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Seek Independent Financial Advice (IFA) for your circumstances.

Keith Churchouse, Chartered Financial Planner
Director of Churchouse Financial Planning Limited

ISO22222 Certified Financial Planner

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