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Junior ISAs to be launched in November

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by Kay Mitchell

The Government has announced a new tax-free savings account for children, known as the Junior ISA.

The Junior Individual Savings Account (ISA), which will be available from 1 November, will allow parents to invest a maximum of £3,000 each financial year in cash and shares.

The Junior ISA will replace Child Trust Funds (CTFs) which were scrapped earlier this year as part of the Government’s spending cuts.

CTFs were introduced by the Labour Government in 2005 and have been available to every child born after September 2002.

The Government provided a £250 voucher, which rose to £500 in the case of low income families, to all newborn babies.

However, unlike CTFs, there will be no Government contributions to the Junior ISA.

Mark Hoban, financial secretary to the Treasury, comments: “Junior Isas are a great example of a simple, clear and jargon-free financial product that allows families to save and invest for their child’s future.”

According to Fidelity International, if a parent invested the maximum £3,000 each year, by the time a child reached 18, they would have savings of £107,923 (based on growth of 5% a year).

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News posted: April 2, 2011

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