As reports emerge that the Junior ISA will allow all those that have not opened a Child Trust Fund to invest £3,000 a year free from income and capital gains tax, head of investment research at Fair Investment Company, George Ladds, who called for a Children’s ISA back in June comments:

“Back in June I called for a Children’s ISA because I believed it would offer a fairer tax efficient environment for people to invest for their children.

“The news that the limit will be set at £3,000 a year is fantastic, as is the fact that they are available not only for those born after January 3rd 2011, but also for those born before CTFs were introduced in 2002 and are still under 18 – it makes for a much fairer system. 

“Child Trust Funds allowed a maximum investment of £1,200 a year and offered limited choice, but the Junior ISA should allow much more scope for parents to invest for their children with the potential for real tax efficient growth.

“We hope they will offer the same flexibility of investment as regular ISAs, meaning that low cost investments such as passive funds would be made available. We plan to look into providing growth investments and savings that will really help parents to make the most of the Junior ISA allowance.

We will be looking to work with providers to offer low cost and simple growth funds on the investment side, as well as seeking out alternative cash ISA opportunities such as structured deposit plans that offer compounding interest, with the potential to pay much higher returns than an average high street cash ISA.

“Recent announcements that university fees could be set as high as £9,000 highlight more than ever the need to save for children, as well as encourage them to save for themselves. Hopefully the Junior ISA will bring saving for children into the 21st century and help children to understand the importance of saving for their future.”

© Fair Investment Company Ltd