Financial Secretary to
the Treasury announces new tax-free savings account for children
Financial
Secretary to the Treasury, Mark Hoban, today announced that the
Government will create a new tax free children’s savings account.
The new account, described as a ‘Junior ISA’, will offer parents a
simple and tax free way to save for their child’s future.
The Government will now work closely with stakeholders to
finalise the structure of the accounts, and intends for the new
accounts to be available by autumn 2011.
The Government is committed to encouraging saving for
children, within the constraints of the public finances. Following
an informal consultation with a range of stakeholders, it is clear
that there is an appetite for families to have a clear, simple and
tax-free savings option for their children, following 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 stocks and shares
• Annual contributions will be capped
• There will be no Government contributions into the account
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".
Notes for Editors
1. On 24 May 2010 the Government announced that it would reduce
and then stop Government contributions to the Child Trust Fund
(CTF). This was part of a package of measures designed to make
exchequer savings of £6.2 billion in 2010-11, to help tackle the
UK’s unprecedented budget deficit. This will save £320million this
year and over £500 million in each future year.
2. In July 2010, the Government made regulations to reduce
payments at birth for children born from August 2010 to £50
(reduced from £250); or £100 (reduced from £500) if they are from
a lower income family. The regulations also stopped all Government
payments at age 7 from August 2010.
3. The Savings Accounts and Health in Pregnancy Bill, introduced
on 15 September 2010, will stop all remaining Government payments
and end new eligibility for children born from January 2011.
4. Eligibility for the new account will be backdated, to ensure
that no child born after the end of CTF eligibility will miss out
on the chance to have one of the accounts.
Non-media enquiries should be addressed to the Treasury
Correspondence and Enquiry Unit on
020 7270 4558 or by e-mail
to public.enquiries@hm-treasury.gov.uk
This Press Release and other Treasury publications are available
on the HM Treasury website
hm-treasury.gov.uk For the latest
information from HM Treasury you can subscribe to our RSS feeds or
email service.
Media enquiries should be addressed to the Treasury Press Office
on 020 7270 5238.
Contacts:
HM Treasury Press Office
Phone: 020 7270 5238
NDS.HMT@coi.gsi.gov.uk