Financial & Legal News

New kid on the block: Junior ISAs

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The Junior Isa (Jisa), available from 1 November 2011, replaces the Child Trust Fund (CTF) scheme, which closed to new entrants in January 2011. Unlike with CTFs, the government will make no contributions but the scheme does extend the popular Isa structure to those under 18.

Jisas can be opened in the name of anyone not entitled to a CTF, which includes all those born before 2002 as well as those born after January 2011. Jisas are similar to their ‘senior’ equivalents in that all income and capital gains generated by investments held within them are tax-free. But Jisas differ from Isas in a number of important respects – for example, the annual limit is £3,600 compared with £10,680 for an adult stocks and shares Isa. Jisas also allow switching from cash to shares and vice versa, which is not currently permissible for the senior version. Children will be allowed to hold one cash and one stocks and shares Isa at a time and split the £3,600 limit between the two.

The money cannot be touched until the child reaches 18, but the child can assume management for the trust at 16, should they wish. At 18, the child becomes entitled to the money held within the Jisa, which if it is not encashed, will automatically roll into an Isa. A Jisa could provide a significant step-up for children whose family and friends get together for their benefit. Final values will always be subject to factors such as the chosen underlying assets and the investment environment, both of which can have an impact on how much – or little – a Jisa will return.

Contacting Us

If you are thinking of opening a Junior ISA or have any questions regarding saving and investing for your child’s future, please do not hesitate to contact us using the details provided below.

Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.

This blog was posted some time ago and its contents may now be out of date. For the latest legal position relating to these issues, get in touch with the author - or make an enquiry now.

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