The Coalition government recently made headlines by announcing a new savings product geared towards children; called the Junior ISA, it is being billed as a viable alternative for parents seeking ways to begin saving for their childrens’ future.
The new goverment-issued savings account package was specifically formulated in order to offer the parents of young children a tax-free and simple way to put away cash for the future of their young offspring. Additionally the ISA savings account was designed to function as an alternative to the soon to be abolished child trust fund. The trust fund is one of many casualties of the Coalition as it begins seeking ways to get a firmer handle on the current UK deficit.
The Treasury’s financial secretary Mark Hoban made the announcement regarding the new savings product. Secretary Hoban stated that the Junior ISA would be available for savers as early as autumn of 2011, since the research conducted by the Treasury with a broad range of stakeholders have demonstrated a strong demand for the new ISA programme; families in particular have been quite hungry for the ability to begin putting tax-free cash aside for the future of their children, Secretary Hoban continued.
Mr Hoban did indicate that the new Junior ISA will differ from the child trust fund in several important ways, however. Most significanty, the government will not contribute to the accounts in any way – a decision that industry experts say is part of the government’s new strategy in cutting costs, as the added expense of government contributions to the child trust fund were making the programme too costly to continue. Additionally, the amount of cash that the Junior ISA can hold without being subject to taxation will have limitations.