Junior ISA is a tax saving scheme that is to be implemented by the United Kingdom government near the end of this calendar year. ISA stands for Individual Savings Account. The new scheme is virtually the same, except for the fact that it is for kids and teenagers, below the age of eighteen. Adults save money on behalf of their children.
The account provides tax benefits. The child’s parents, grandparents or any other relatives and friends can deposit money in this account provided that it doesn’t exceed the limit. The limit is going to be set at 3000 GBP per year. If the money stays in the account, it will be tax free every year. The same limitations that apply to a general ISA also apply here.
- The scheme is open to all children who were born before 3rd January 2011.
- It is not available to those who have already enrolled, or are a part of, the Child Trust Fund. It is also unavailable to those children under 18 who are born before 2nd September 2002.
- The applicants have to be UK residents.
- The money is kept in the account and can be withdrawn when the child has reached adulthood, without losing any tax benefits.
- The tax savings are the same as they are for the normal ISA
- This scheme is covered under the FSCS (Financial Services Compensation Scheme), so the account holders can be assured of their money’s safekeeping.
- There are two types of Junior ISA Investments. One is Junior ISA investment, in which the money is kept in the form of stocks and shares. The other one is the Cash Junior ISA. A child is allowed to have one of each type.
This scheme not only provides tax incentives, but also provides a security for the child’s higher education.