Junior ISA Regulations published

: Published on Tuesday, 02 August 2011

This week, as anticipated, the Government laid detailed Regulations, amending the existing ISA (Individual Savings Account) Regulations, to provide for the establishment of Junior ISAs. It has confirmed that Junior ISAs will have the following key features:

All UK resident children under the age of 18 who do not have a Child Trust Fund (CTF) will be eligible for Junior ISAs.
Any income or gains will be tax-free.
Both cash and stocks and shares Junior ISAs will be available. Children will be able to hold up to one cash and one stocks and shares Junior ISA at a time (two accounts in total).
There will be an overarching contribution limit of £3,600 per year which will be indexed by CPI from 6 April 2013 onwards.
Accounts will be owned by the child and funds will be locked in until the child turns 18.
Children will have the right to manage their accounts from age 16.
Junior ISA accounts will by default become adult ISAs on maturity.

The increase in the annual contribution limit from £3,000 to £3,600 is a positive step, as is the decision to allow providers flexibility to decide what type of product they want to offer. The old Child Trust Fund rules forced providers to offer a ‘cash’ version which made CTFs less attractive to those wanting to offer equity-based products. These measures should encourage more providers to enter the market which in the long term will deliver opportunities for lower cost, better performing investment.

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