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What is a Junior ISA?
A Junior ISA is a tax efficient savings account, similar to a standard ISA that you may have yourself. They were created to replace the Child Trust Fund (CTF) in November 2011 to help families save for their children’s future, and to create long-term saving habits for young children. There are a few ways they differ from the type of ISA you may be used to:
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The child named on the Junior ISA will be the only person who can access the money held in the Junior ISA, and then only when they turn 18 years old
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Anyone is able to pay money into the Junior ISA, whether they are the child’s parents, grandparents, family or friends. However, only parents can open a plan.
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The total amount you can pay into a single Junior ISA is £4,080 for the 2015/2016 tax year. Each tax year this amount usually increases
Once a child turns 18 years old, they will be able to access their money. If they choose to keep on saving, the Junior ISA will be automatically changed into an ISA, and their limit will increase to the higher limit of the adult ISA.
A little something for you
As a ‘thank you’, once you have opened a Junior ISA online with Shepherds Friendly you will be entitled to a Love2Shop voucher code of up to £30! This code can be used online at a wide variety of retailers including Amazon, Marks & Spencer, Debenhams, John Lewis, iTunes, Topshop and more.
Click here to find out more and apply online.
Why should I choose a Junior ISA for my child?
The Junior ISA has been designed to encourage children to save well into their adult years. It can help children save pocket money, money they are given on their birthdays, or alternatively, you can save into a Junior ISA for your child as a surprise for their 18th birthday.
The Junior ISA can be a great way to ensure your child’s money stays untouched until their 18th birthday and to ensure that they are the only one who receives the money. Anyone and everyone can pay into a Junior ISA, if they wish. For example, at Shepherds Friendly they speak to plenty of friends and family members around birthdays and at Christmas time who pay into a Junior ISA for a child that they love.
The plan is designed to be long-term and has the potential to receive an annual bonus, meaning your child’s fund could grow year after year.
You can open the Junior ISA if you are either the parent or legal guardian of the child and if your child does not already have a CTF. If your child was born between 1st September 2002 and 2nd January 2011 (and was automatically issued a CTF) you can now transfer their CTF to a Junior ISA if you wish to. Once opened anyone who wishes can save into the account, helping to increase the saving potential. With payment options starting at only £10 a month, the savings plan is easily accessible for most people looking to save for their children’s future.
What does tax efficient mean?
Tax efficient savings plans are free of both income and capital gains tax, which means even more of the money you save goes to your child. They are a long-term investment, which also means there is a bigger potential for investment growth.
Junior ISAs are helping many families save for their children’s futures, and are set to only grow in popularity as the government has announced all Child Trust Funds can be transferred to Junior ISAs as of April 2015.
Shepherds Friendly offers a competitive Junior ISA which aims to pay annual bonuses into the plan. They are very proud to say that they have paid a consistent bonus on their Junior ISA to members since they launched it as a product back in November 2011. This means they have added that little bit extra to all of their members’ savings each year
Are there any risks?
The Shepherds Friendly Junior ISA cannot fall in value, unlike some other riskier investments.
Shepherds Friendly invests in stocks and shares for growth, and the only risk involved with this is that when investment conditions are particularly bad, Shepherds Friendly may not pay an annual bonus.
Click here to find out more about other children’s savings plans offered by Shepherds Friendly.
Mother & Baby is a trading style of Bauer Consumer Media Ltd. Bauer Consumer Media Ltd is an Introducer Appointed Representative of The Shepherds Friendly Society Limited.
Shepherds Friendly is a trading name of The Shepherds Friendly Society Limited which is an incorporated Friendly Society under the 1992 Friendly Societies Act No. 240F. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
All references to taxation are to UK taxation and are based on Shepherds Friendly Society's understanding of current legislation and H M Revenue and Customs practice which may change in the future. For our With Profits plans investment growth is by means of bonuses, the amount of which cannot be guaranteed throughout the term of the contract.