With the elimination of the Child Trust Fund, the government of the UK is implementing a new program called a Junior ISA. It is set to be introduced on November 1, 2011. The Junior ISA is a savings plan whereby friends, parents, and grandparents can accumulate cash over a period of several years. It can be used on anything once the child reaches the age of 18 and is exempt from inheritance taxes.
When you compare Junior ISA‘s to the original Child Trust Fund, those children who were not eligible for a Child Trust Fund and those born before September 2002, will now be able to open a Junior ISA. Once the child reaches the age of 16, they can take over the funds, but cannot touch any of the monies until they reach 18 when the fund becomes a standard ISA. This makes sure that the monies accumulate a great amount plus tax free interest and dividends.
Offered by private providers, Junior ISA’s offers stocks and shares based accounts or cash based accounts. Whether the monies saved are used to buy a home, start a business, or for tuition fees, it is important for children to have some sort of financial planning put into place for them.
