Happy Birthday Junior ISA!
04/11/2014
2011, what an incredible year. In terms of events of historical importance, 2011 had it all. The frantic preparation for London hosting the Olympics, the devastation of the Japanese earthquake, the controversy of the phone hacking scandal, the panic of the summer riots and all the elaborate royal wedding, to name but a few. It was a year that no one will forget in a hurry!
And then there was the launch of the Junior ISA…!
What is the Junior ISA?
Yes the Junior ISA! Created to help nurture long term saving habits among young people, the Junior ISA was made available for six million children in the UK when it was launched on the 1st November 2011. A further 800,000 children would also benefit from it each following year. It is now three years old. Happy birthday Junior ISA!
What are the benefits of a Junior ISA?
Not just parents, but family, friends and guardians of the child could now contribute to a fund that would go directly to the chosen child once they turned 18 years old, and not a second before. There is no way to get the money before the child turns 18 , so you know no matter what happens to your family, if you have paid some money into the Junior ISA, the child will get that money back. At the point of introduction, savers were allowed to put £3,600 a year tax free in the Junior ISA (this has now increased to £4,000.) Now, three years on, has the Junior ISA proved a success?
Is the Junior ISA a success?
In the first year of the plan, 72,000 accounts were opened, and a total of £116 billion was saved. As six million children were eligible, this was a small number in comparison. There were signs of some success after the first year though. The average amount of money held in the Junior ISA over a year was £1,164, compared to the £321 per account of the Child Trust Fund. Those who had opened an account were certainly making the most of their tax free savings.
Two years on, and three years since the initial launch, a total of 432,000 accounts have now been opened. In the last year alone, account openings have raised by a full 46%, with 136,000 more families using the account with vigour. Junior ISA’s are predicted to see an even bigger rise in April next year, when the many families with Child Trust Funds will be able to switch their money to the Junior ISA, which is known to have much better rates.
The Junior ISA has grown massively in popularity since the introduction of it in November 2011. Whether they have met their goal of instilling long term spending habits into the youth of today is something we will not know for a long time, but there is no doubt that they are a great way of saving money for your child’s future, tax free.
Should I get my child a Junior ISA?
So, in the future when you think back to the crazy year that was 2011, don’t forget the introduction of the Junior ISA. Maybe not as important as the Arab spring or as momentous as the royal wedding, it has still helped thousands of families save for their children.
If you would like to take advantage of the tax free savings the Junior ISA offers, have been thinking about saving for your little ones future but were unsure how to do it, or simply would like to find out some more information on the Junior ISA, please give one of our fully qualified, friendly financial advisers a call today and see how they can help.
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