Government announces new tax-free savings accounts for children
New tax-free saving scheme to replace Child Trust Funds, but don’t expect any government contributions
Despite ending Child Trust Funds (CTF) from January 2011, the Government hopes that parents will continue to save for their children’s’ future. To help, they have announced a new tax-free savings initiative, “Junior ISAs” that will begin towards the end of next year.
The funds will allow parents to save money tax-free in accounts that will be owned by the child and locked until he or she reaches 18. However, unlike with the CTF, the Government will not be contributing any cash to these ISAs.
“I am committed to ensuring that all parents can save for their children’s future in a simple and straightforward account,” explained Financial Secretary at the Treasury, Mark Hoban. “The introduction of this new account means that we can still offer people a clear way of saving for their children, while saving the half billion pounds a year that we currently spend on Child Trust Funds.”
Coming after many reductions in benefits for children and families have been by the coalition, response has been muted. However, Andrew Hagger from Moneynet.com said it was important parents had somewhere to save for the future.
"It's important that a specific savings vehicle exists for children, although without any incentive or contribution from the government and rates at such a low ebb, it's difficult to see this being a roaring success,” Andrew said.
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