Junior ISA details to be set out

Details of a planned new tax-free savings account for children are expected to be set out later.

It is proposed that a Junior Individual Savings Account (Isa) will be launched in the autumn, with an annual contribution limit of up to £3,000.

The government said last autumn that it was considering the investment scheme, and will now publish draft regulations for consultation.

Junior Isas will replace Child Trust Funds, which have been phased out.

Investments in CTFs have a £1,200 limit, but this will now be aligned with the £3,000 Isa limit so that parents do not lose out.

But, unlike CTFs, there will be no government contributions into each child’s savings pot.

Junior Isas will be offered by high-street banks and building societies.

Money invested in them will be “locked in” until the child is 18, and the Isa will then, by default, become an adult one.

Children are currently limited in the amount of tax they can shield from the Revenue. Junior Isas will be a way of side-stepping this limit.

The Treasury has estimated that six million children will be eligible for Junior Isas at launch, with 800,000 more eligible each year after that.

Consultation on the draft regulations is expected to continue until May, with the launch of Junior Isas set for 1 November.