Junior ISAs

Following the demise of Child Trust Funds (‘CTFs’), the Government has announced that an alternative tax-free savings plan for children is to be introduced, which has been dubbed the Junior ISA.

The new product will be available from the Autumn of 2011 but will be available for all children born after the withdrawal of CTFs. The same tax advantages are likely to be maintained as from CTFs, but participation will be optional and there will be no Government contribution.

An alternative way of saving for children is to place a taxable investment in a bare trust. This permits any gains to be set against the child’s annual capital gains tax allowance and any income against their income tax allowance.