The Treasury is consulting the industry over plans to launch “junior Isas” for children as a replacement for child trust funds (CTFs).
The Treasury has issued an informal paper to stakeholders about creating children’s savings accounts and will study responses as part of its decision on whether to launch the schemes.
Money Marketing, Fund Strategy’s sister publication, understands the new schemes would allow tax-free investment in cash or stocks and shares up to an annual limit and funds would be owned by the child but locked-in until the child reaches 18. They would differ CTFs in that there would be no government contribution payments. (article continues below)
The coalition government has previously announced plans to scrap child trust fund accounts, ending the scheme for children born after January 2011.
A Treasury spokesman says: “The government is committed to encouraging saving. We are currently discussing with relevant stakeholders the possibility of introducing a tax-free children’s savings account.”