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Government unveils ‘Junior ISA’ plan

 

Plans to create a new tax-free savings account to replace the Child Trust Fund (CTF), have been unveiled by the Government.

 

A new ‘Junior ISA’ will offer parents a simple and tax-free way to save for their child’s future, the Treasury said.

 

Funds placed in the account would be locked in until the child reaches adulthood and, as with adult ISAs, annual contributions will be capped.

 

All returns will be free of tax and investments will be available in cash or stocks and shares.

 

However, unlike CTFs, there will be no contributions from the Government.

 

Earlier this year, the Coalition announced that it would be sharply reducing, and then stopping, all Government payments into CTF accounts. Eligibility will also cease for children born from January 2011.

 

Unveiling the new Junior ISA, the Financial Secretary to the Treasury, Mark Hoban, said: ‘I am committed to ensuring that all parents can save for their children’s future in a simple and straightforward account.

 

‘The introduction of this new account means that we can still offer people a clear way of saving for their children, while saving the half billion pounds a year that we currently spend on Child Trust Funds’.

 

The Government hopes that Junior ISAs will be available by autumn 2011.