Junior ISAs

September 27, 2011 | Posted by Michael Bailey

Junior ISAs were announced by the Government earlier this year and are due to be launched in November.  They will enable parents and grandparents – as well as other family members – to invest up to £3,600 per annum on behalf of children below the age of 18.

This development could be particular attraction to parents who have used their own ISA allowances but would also like to make some provision for their children’s futures in terms of planning for university fees.  The impact of an above average level of growth in a low tax environment could add up to a substantial pot by 18.

Some commentators have expressed concerns that the child will become absolutely entitled to the cash from the ISA at age 18; that is, they could effectively do what they want with it and may not use it for the intended purpose.  Withdrawals won’t be permitted before maturity either.

Nonetheless, junior ISAs could represent a sensible alternative to other forms of saving on behalf of children and it will be worth monitoring how the market develops.

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