On 27 July 2011 the Government laid detailed Regulations, amending the existing ISA (Individual Savings Account) Regulations, to provide for the establishment of Junior ISAs to replace Child Trust funds, which ceased to be available from January 2011.

Unlike its Child Trust Fund predecessor, Junior ISAs will not receive any government contributions and there will be no automatic enrolment.

The key features of the Junior ISA will be as follows:-

• Junior ISAs will be available from 1st November 2011
• All UK resident children who do not already have a Child Trust Fund (CTF) will be eligible for a Junior ISA – including children born before the start of CTF eligibility in September 2002.
• However, children with a CTF will not be eligible for a Junior ISA and it will not be possible to transfer from a CTF to a Junior ISA, or vice versa.
• Anyone with parental responsibility for an eligible child will be able to open Junior ISAs on their behalf but eligible children over the age of 16 will also be able to open Junior ISAs for themselves.
• Any income and gains will be tax-free (apart from the non-reclaimable 10% tax credit on UK dividends in a stocks and shares ISA) and they will be exempt from the normal rule that the parent is taxed on the child’s investment income if this exceeds £100 a year and came from the parent.

• Children will be able to have one cash and one stocks and shares Junior ISA at any time, subject to an overall annual contribution limit of £3,600. The Government will also increase the current CTF limit of £1,200 up to £3,600 to ensure that CTF holders are not disadvantaged.
• If the child has both a cash and a stocks and shares Junior ISA, the £3,600 contribution limit will operate across them both – so a total of £3,600 of contributions each year will be permitted between both accounts. There will therefore be no rules on how contributions have to be allocated between cash and stocks and shares Junior ISAs, and it will be possible to transfer funds from one type of Junior ISA to another.
• Funds in Junior ISAs will be ‘locked in’ until the child is 18, at which point they will then, by default, become adult ISAs.
• Having a Junior ISA, however, will not affect an individual’s entitlement to adult ISAs. This means that it will therefore be possible for Junior ISA account holders to open adult cash ISAs from the age of 16, and the Junior ISA contributions will not impact upon the adult ISA subscription limits.

If you would like to speak to an adviser about Junior ISAs, please contact us on 01246 810004