What Are Your Views On The New "Junior ISA " Announced Today By The Government?
| Related: | Personal Finance•Investing•Child Trust Funds |
A tax-free children's savings account to replace the axed child trust fund (CTF) was announced by the government today. The "Junior Isa" promises parents a simple and tax-free way to save for their children's future but, crucially, there will be no government contribution or matched payments under the scheme. CTFs were withdrawn by the coalition government in May, with all payments to parents ceasing from 31 December 2010. The Junior Isa, which extends the individual savings account (Isa) to children, is expected to be introduced in Autumn 2011.
All returns within a Junior Isa will be tax free and all funds placed in the account would be owned by the child and would be locked in until he or she reached adulthood. Investments will be available in cash or stocks and shares and annual contributions will be capped. Adults can currently invest up to £10,200 a year in an Isa, holding up to £5,100 in cash deposits.
Personally, I welcome this initiative as it should hopefully motivate parents who appreciate just how hard it really is to raise children from birth to 18 years to instill and adopt a disciplined approach to saving for their offsprings' future. Why? Because the government will no longer be handing out "easy money" as was the case with Child Trust Funds and maybe, by parents having to find the savings themselves will be more determined to carry through that culture of savings. This savings attitude could then be passed on to future generations and who knows, peradventure in a few decades, it could transform the UK into a nation of savers rather than unfortunately it is currently, as a nation of mainly borrowers.
Responses (5)
I think it is an excellent idea and look forward to hearing more about it and the amounts that could be invested in addition to the tax free allowance we already have (or will that form part of the allowance?). Not only do I think it is a good idea for parents, but good for children too. I try to encourage my daughter to save her money and only spend it when she feels she needs something and often tell her that if she wants something then she has to contribute towards the cost herself. She is certainly at an age now when she can appreciate the value of money and how much things cost. The child trust funds weren't in existence when she was born in 1999 but my Mum set up a savings account for her when she was born and paid £100 into it to get her on her way! I certainly don't want her to grow up with the belief that she can just borrow money to get what she wants.
It's a good idea in that it will encourage parents and children to save, but it could be improved by allowing the monies from the now defunct Child Trust Funds to be transferred into the Junior ISAs.
I agree this is a great idea, however it annoys me slightly that they didn't just keep child trust funds and just stop the contributions to these. Surely it would have saved a lot of the cost of releasing the new Junior ISA by keeping the existing child trust fund product?
I do agree though that hopefully it will have an excellent knock on impact on children and adults saving for their future.
Hi Creativesaver
I think that any encouragement to save by anyone is an excellent idea. I think that saving for children is brilliant but aren't all childrens savings accounts tax free anyway?
I wholeheartedly agree that children should be encouraged to save and both of my children have savings accounts that I have opened for them and save into for them, they are really too young to understand what it is, but my eldest child has a money box that she decorated and is encouraged to put pennies into (probably why they don't stay in my purse too long).
I do not feel however, that the Child Trust Fund was "easy money". Our children are the countries future so why not invest in their future, surely this could benefit the countries future wellbeing.
This ISA is only going to benefit children whose parents would save for them anyway, what about children whose parents have no intention of saving for them, the Child Trust Fund was forced saving, because the parents could only decide where it was going, they could not withdraw the money and spend it.
I think it is a good idea and thinking ahead you could build a substantial sum into a tax free ISA.
The real benefit is that it is at the moment tax free which means you do not have to declare the interest as income. this has really good implications further into the childs life and adulthood.
There will also be some who do not turn out as you expect and blow the lot on their 18th Birthday, buts that up to the parents to put the necessary brain cells in the right order
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