The overall annual contribution limit for junior Isas has been set at £3,000.
Last week, the Government published the draft regu- lations for junior Isas as part of the latest version of the Finance Bill.
The Treasury says six million children will be eligible for junior Isas, which will replace child trust funds, when they launch on November 1. It expects a further 800,000 to become eligible each year.
Children will be able to have one cash and one stocks and shares junior Isa at a time. Funds in junior Isas will be locked in until the child is 18 when the accounts auto- matically become adult Isas.
The Treasury says if a parent contributes the maximum amount over 18 years, a child could see resulting funds of up to £80,000.
Those who already have a child trust fund will not be eligible to pay into junior Isas but the Government will increase the child trust fund contribution limit from £1,200 to £3,000 in line with junior Isas.
Treasury financial secretary Mark Hoban, who announ- ced the Government would create a new tax-free child- ren’s savings account in October, says: “Junior Isas are a great example of a simple, clear and jargon-free financial product that allows families to save and invest for their child’s future.”
But Yellowtail Financial Planning managing director Dennis Hall says: “Some middle-class families will see this as a great thing but there is a huge group of disadvantaged people that will not. There is not enough slack there to encourage the people that the Government want to encourage to save to do so.”