The government has announced more details about the tax-free children’s savings account, known as the ‘Junior Individual Savings Account’ or ‘Junior ISA’. Read on to find out about the new features. 

The Junior ISA will offer parents a new, tax-free way to save for their child’s future.  However, unlike the Child Trust Fund account (which has been closed to children born on or after 3 January 2011), the government will not make any payments into the new accounts.

The new features of the Junior ISA are:

• children living in the UK who do not have a Child Trust Fund account will be able to have a Junior ISA
• people will be able to put money into a cash account or ‘stocks and shares’ account
• each child will be able to have one cash and one ‘stocks and shares’ Junior ISA at any one time
• there will be a total yearly limit of £3000 for all payments into these accounts
• accounts will become ISAs when the child is 18

As with Child Trust Funds, the following will apply to Junior ISAs:

• the accounts will belong to the child and they are not able to get the money out until they are 18
• any money the accounts make will be tax free
• a range of banks, building societies, credit unions, friendly societies and stock brokers will offer Junior ISA accounts

The government is still finalising the rules for Junior ISAs and will publish these in the summer. The first new accounts are expected to be available in autumn 2011.