Client questions
There are many financial issues facing us all in the UK today; an ageing population, pressure to consume, insufficient saving, incomprehensible financial products and services, whilst to top it all there are very few places to turn for truly impartial advice.
This section of our website aims to answer some of the questions we are commonly asked by clients. We hope you find what you need, but if not why not have a look elsewhere on our site or e-mail us your question using our enquiry form.
Q - Should I save into a Junior ISA?
In his 14th October 2010 speech, Financial Secretary to the Treasury, Mark Hoban, announced that the Government will create a new tax-free children’s savings account with the intention that these will be available by autumn 2011.
Described as ‘Junior ISAs’, these will offer parents a simple and tax free way to save for their child’s future. This follows the end of Child Trust Fund eligibility from January 2011. The new account will have the following key features:- All returns will be tax free
- Funds placed in the account will be owned by the child and would be locked in until the child reaches adulthood
- Investments will be available in cash or shares
- Annual contributions will be capped
- There will be no Government contributions into the account
The differences from Child Trust Funds are, therefore, the lack of Government contribution, the fact that they will be accessible to a wider range of children, not just those born on or after 1st September 2002 and probably the maximum contribution allowance too.
Where parents want to set up a separately identifiable investment portfolio for their children, Child Trust Funds proved a reasonably easy way of doing this and we expect Junior ISAs to do the same. However, many parents are concerned about their children receiving a large pot of money at 18. An alternative is for parents to make their own finances as efficient as possible, with a coherent strategy across pensions, ISA, mortgage repayments and other investments and retain control over when and how much money to pass to their children, perhaps to cover university costs or to put towards their deposit on a first home. Where proposed gifts to children are large and are part of an Inheritance Tax planning strategy, trust arrangements may be more appropriate.
Evolve - December 2010
