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Child Trust Fund holders to be able to switch to Junior ISA


The government has announced plans to allow savings invested into a Child Trust Fund to be transferred to the newer child savings account, the Junior ISA following a public consultation. The move could potentially benefit over 6 million children with savings deposited in a Child Trust Fund.

The government led Junior ISA initiative was introduced in 2010, following the closure of the Child Trust Fund Scheme. Once a Junior ISA has been opened, up to £3,720 per year can currently be invested into the account on behalf of a child under the age of 18, without tax being paid on any interest or gains, whilst this is set to rise to £3,840 in the 2014/2015 tax year as an outcome from the recent Autumn Statement.

Junior ISA’s have generally performed better than the Child Trust Fund since its introduction, with the average Child Trust Fund offering lower interest rates and bonuses than the average Junior ISA account. However, until now, those with children born between the 1 September 2002, and 2 January 2011 have been unable to open a Junior ISA for their children due to being automatically allocated a Child Trust Fund.

However, this new government move means that those with savings invested into a Child Trust Fund, will now be able to switch to the Junior ISA.

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