Next year, Junior ISAs will replace Child Trust Funds (CTFs). These new ISAs are essentially savings accounts allowing parents or anyone else save money for their child’s future tax-free.  However, when you compare ISA savings accounts with the former CTFs, you will find that the Junior ISAs will receive no government funds including the starter lump sum.

Similar to the adult ISA, the Junior ISA will have a limit on how much can be saved each year, but this cap has not yet been announced. They can also be held in cash or invested in shares funds or stocks. Although there has been no formal announcement, it is speculated that children will have to be 16 or 18 before they can apply for the adult ISA allowance. Until then, this money is inaccessible but will be registered in the child’s name for the entire life of the account. Children born before the August 2011 launch date will be eligible for the new Junior ISAs as well as those born before September 2001 and were ineligible for CTFs. Since CTFs will close to new openers in January 2011, children born between this date and the launch date will also be eligible for the new savings accounts.

Parents will have to look to financial firms or private providers rather than the government for these isa savings accounts since the governments reasoning behind discontinuing the CTFs is to help reduce the public deficit. In addition, the Junior ISAs are meant to offer parents a relatively inexpensive means of saving even though they will no longer receive government contribution payments for these accounts. Right now, it is unknown whether parents can hold both a CTF and a Junior ISA for their children.

Simon Potter is a freelance article writer who writes for FinanceWeb.org about current financial news. He also writes easy-to-understand guides on how to effectively manage personal finances and gives tips on where to find finance tools, information and resources on the internet.


Article from articlesbase.com

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