The government has announced plans to allow savings invested into a Child Trust Fund to be transferred to the newer child savings account, the Junior ISA, as of April 2015, following a public consultation. The move could benefit over 6 million children with savings deposited in a Child Trust Fund.
The government led Junior ISA initiative was introduced in 2010, to replace the Child Trust Fund, which was made unavailable to children born on or after 2nd January 2011. Once a Junior ISA has been opened, up to £3,720 per year can currently be invested into the account on behalf of a child under the age of 18, without tax being paid on any interest or gains.
Junior ISA’s have generally performed better than the Child Trust Fund since its introduction, with the average Child Trust Fund offering lower interest rates and bonuses than the average Junior ISA account*. However, those with children born between the 1 September 2002, and 2 January 2011 have been unable to open a Junior ISA for their children due to being automatically allocated a Child Trust Fund.
However, this government move means that those with savings invested into a Child Trust Fund, will eventually be able to switch to the Junior ISA.
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