PARENTS putting away cash for their kids in Junior Isas and Child Trust Funds will be able to save more than double the amount from April.
Announced by the Chancellor in today's Budget, the annual limit will increase from £4,368 to £9,000 on April 6.
Junior Isas were introduced in November 2011 and replaced Child Trust Funds (CTFs), which had been offered from 2002.
Both are tax-free accounts, where the money is locked away until the child turns 18 years old.
Since CTFs have been phased out, it's no longer possible to open a new account but you can continue to pay into an existing CTF.
In the Budget document, the government said: "By saving towards their future, families can give children a significant financial asset when they reach adulthood – helping them into further education, training, or work."
Junior Isas and Child Trust Funds aren't necessarily the best savings accounts for your kids – check out our round-up of the top accounts here.
Michelle Pearce-Burke of digital investment service Wealthify, welcomed the Budget move and said "there’s a growing expectation on parents to help their kids financially when they reach adulthood".
She added: "With the cost of higher education and property set to continue rising, parents who plan to help their children with these major life expenses will need to start thinking sooner rather than later about where the money will come from."
But Laura Suter, personal finance analyst at AJ Bell, said it's "unlikely" to be a boost for a majority of households as the average user puts aside just £1,000 a year.
Top tips for teaching kids to save
MAKE saving fun – try these tips to get your kids started:
- Match your children’s savings on a pound for pound basis
- Get your kids to put some of their pocket money into a piggy bank
- Then take them to the bank every month to pay it in – get them used to the habit of saving and seeing their balance grow
- Draw a chart on their wall and colour it in as the balance grows to keep them interested and so they can monitor their progress.
She said: "The move to hike the Junior Isa allowance but keep the main Isa and Lifetime Isa rates the same means it only benefits a smaller group of people – making the move cheaper for the Government.
"The increase in allowance means a parent starting next month for a newborn child could build a tax-free pot of more than £240,000 by the time their child reaches 18."
This assumes they put in the maximum each year and that it grows by 4 per cent every year after charges.
In good news for motorists and drinkers, today's Budget also included freezes in fuel and alcohol duties.
Plus, Mr Sunak confirmed a National Insurance tax cut saving hardworking Brits £100 a year.
Parents can give their child £3,000 when they turn 18 for the same price as a LOL Surprise doll.
Meanwhile, two million 16-year-olds could have up to £4,500 FREE cash in lost child trust fund accounts.
We helped one mum track down her 13-year-old son's £800 missing child trust fund.
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