Yes it’s the start of a new tax year, but with the same pitiful savings rates for those of us who want something back for our hard earned cash in the bank! Most people are aware of ISAs and their allowances, but what about Junior ISAs for our darling offspring?
Family Investments published a report indicating that almost 60% of parents whose children are under 18 years of age do not know what a Junior Individual Savings Account even is. However 92% of parents believe that saving is vital for their children which show that despite parents’ intentions to save for their children they do not know of all of the methods in which they could save more money, tax-free.
The 2 Junior ISAs available are cash Junior ISAs – where up to £3,720 can be invested in any one tax year and no tax needs to be paid on any interest earned; and stocks and shares Junior ISAs which are where the money is invested by the ISA providers and again no tax needs to be paid on any growth in capital or dividends that are received from the investment.
Money put into Junior ISA accounts is only accessible by the child at the age of 18 or older.
The product was made available in November 2011 with the goal of providing tax-free savings to those now unable to use a Child Trust Fund – the initiative that was previously set up by the Labour government to help people save for their children’s futures.
Currently up to £3,720 every tax year can be put into a stocks and shares Junior ISA and a cash Junior ISA. Within the first 5 months of the announcement of Junior ISAs, 72,000 in total were sold.
Family Investments’ Head of Savings and Investments Kate Moore commented: “We need to encourage those who do not currently save to get into the habit of doing so, i.e. those on lower incomes. Young adults today face very significant financial costs such as university tuition fees and deposits for a first home. If the current situation with children’s savings is not addressed then the government is unlikely to achieve its objectives.”