MSE NEWS: Junior Isa limit to be £3,600 27 July 2011 at 5:30PM in ISAs & tax-free savings 12 replies 3.5K views

Former_MSE_Helen

This is the discussion thread for the following MSE News Story:

"New regulations have today been laid down in Parliament for the accounts that begin in November ..."

Read the full story:
Junior Isa limit to be £3,600

photome

The article says the junior ISA wont be taxed ? I didnt think ISAs were taxed anyway.

My 16 year old son is looking for somewhere to put some money and had settled on the santander ISA at 2.8% above bank rate for a year, (so 3.3% interset).

Is that the best option for him or is he even allowed to? If he is then what is the point of a junior ISA

Aegis

photome wrote: »

The article says the junior ISA wont be taxed ? I didnt think ISAs were taxed anyway.

My 16 year old son is looking for somewhere to put some money and had settled on the santander ISA at 2.8% above bank rate for a year, (so 3.3% interset).

Is that the best option for him or is he even allowed to? If he is then what is the point of a junior ISA

Junior ISAs are the replacement for Child Trust Funds, so they're for parents (and others) to invest in on behalf of minors who otherwise can't usually have investment accounts in their own names.

skylight

I assume that in the Junior Isa's the money cannot be removed once in??



Lets hope they allow the CTFs to be transfered to Junior Isa's too. Hopefully a far better rate of return!

jamesd

A 16 year old can use a cash ISA but not a stocks and shares ISA. Is he a tax payer?

photome

jamesd wrote: »

A 16 year old can use a cash ISA but not a stocks and shares ISA. Is he a tax payer?

No he is going in to 6th form and no job

gadgetmind

I think the intention was that these work just like normal ISAs but with the lower limit. So, the restriction will be on how much you can subscribe (pay in) in any one tax year. The number of withdrawals probably won't be limited, nor the total that can be in there, but once you withdraw money, it's out. You'll probably only be able to do one cash plus one S&S per year, but it looks like you'll be able to do 100% cash rather than the 50% cash restriction you have with "grown up" ISAs.

BargainMad_3

Reiwxib wrote: »

R.E. MSE news.....

In March, the Government announced the limit for CTFs as £3,000 but it has today increased that in line with the junior Isa to £3,600 on 1 November (see the Junior Isa plans unveiled MSE News story).


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We invested out child's £250 in a self trade silver ETF - SLV, a few years ago.

The silver price has been going up around 80% each year and looks like it will continue to.

Now it's worth £1500 and looking like it will double again shortly, by the time child is 18 yrs old it will be worth a hell of a lot.

So my question is what happens when it becomes worth more than the £3,600 limit? Does it just mean the amount over the limit is not tax free any more?

The limits apply to money PUT IN per tax year and so with investment gains it can go well above the investment limit and it does not matter.

So £3,600 (the limit per year) can rise to £36,000 or £360,000 and it is not affected. It is all shielded in the ISA.


The same applies if your £3,600 is invested in something that falls. So £3,600 can go down to nothing but the limit has been used. Of course that means that you cannot then "top up" again as the £3,600 goes on the money initially put in even if it then turns out to be invested in something worthless.

edinburgher

Sounds like more great news for the rich, who are pretty much the only people who will have £300/mth spare to squirrel away for their children.

I am being glib - I know that most families will try to do best by their kids and put a bit aside for their future, but realistically it won't be anything like this much. Still, it does get around the issue of children being taxed when the income on their accounts exceeds £100/year (assuming all their savings are locked up in an ISA).

snmrw

I am slightly annoyed that the children who were entitled CTFs are not allowed to have junior ISAs. I have specifically not invested in the CTF for the past year as I knew that ISAs would be introduced. Furthermore, how is it that ISAs are allowed an annual limit of £3600, but CTF are only allowed £1200? The CTFs have management charges that go with them, which ISAs do not...I think this is very unfair so hope that the government let us transfer CTF money into an ISA.

Anyone know of any good kid savings accounts? Looks like for the time being, I will have to open one of those instead!

chazzee

My only two concerns would be:

1. The money is locked in until 18. Therefore it can't be used to support the child up to that age.

2. The child can do as they wish with the balance and the parents have no control.

I guess you need to weigh up wether it's worth sacrificing the tax free element for some control. In reality, it's only the income tax that's an issue here (parental gifts which yield over 200. in income per year - 100. per parent). The way I look at this is if I decided to invest in growth OEICs which yield little or no income (which is probably what i'd look to invest in within the ISA wrapper anyway), then it's very unlikely the child would exceed the CGT limit, and even then you could realise a gain for a given year if required.