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Junior ISAs

Kids | Child Trust Fund

By Justin Modray, published 29 October 2010.
Helpful? 4

Is an ISA for kids something to get excited about?

It seems the Government would like to introduce ISA accounts for children sometime next year. While there's little detail yet, This will likely give the option to save in stocks & shares or cash, just like conventional ISAs.

Given the Government won't be putting any money into the pot, Junior ISAs are hardly anything to get excited about, but being tax-free they could make tax affairs simpler when saving for child compared to the present.

At the moment savings and investments are only taxed as a child's if held directly by them or via a bare trust. Otherwise parents, grandparents and other relatives could find themselves liable for tax on income and gains. And parents are liable to income tax on annual income that exceeds £100 per child per parent on money they've gifted.

Given most people seem to be ignorant re: these tax rules (hence probably don't pay tax) I doubt the introduction of a Junior ISA will cost the Treasury much money.  But it will only stand a chance of working if a sufficient number of ISA providers offer accounts to ensure decent competition and choice.

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