In today’s turbulent times, where financial market is dwindling, the best protection you can offer your children is through financial protection. Having a saving plan for kids is a great idea in this regard. In United Kingdom, through save with a junior ISA program, Govt has given a great opportunity to the parents, wherein they can save money on the name of kids, and interest earned on that money is kept free from taxes.
The Junior ISA has been launched to replace the old Child Trust Fund/CTF , subscription to which has been closed on Jan 2011. The core objective of adding Junior ISA is to provide parents with an effective and efficient way to save money for the future of their children, which they can get back, once they reach adulthood.
This plan is only for the children of UK resident and those who are not covered in the old Child Trust Fund. Children, on the name of whom the Junior ISA account would be opened, must be of the age below 18 years . Children with the age of more than 16 years and open a standard cash ISA anyway.
Although the Junior ISA can be opened, registered and maintained by an individual parent or guardian, the funds in the account remains in the ownership of the child.It can be switched into the child’s name, if they are 16
When you decide to open a Junior ISA account for your child, you have an option to choose between the two Junior ISA accounts option. Type 1 is the basic cash Junior ISA and Type 2 is the shares Junior ISA. The preference of opening the account depends solely on the risk appetite and whether you prefer a fixed but low return on your savings or a higher return which comes with higher risk.
The basic advantages are same, as the interest which is earned from any of these accounts are completely free from any income tax liability. There is also an amazing opportunity of getting paid through family members, like Grandparent or your Uncle and Aunts or even Family friends.
The two types of Junior ISA include the basic cash Junior ISA, and the stocks and shares Junior ISA. This latter type of children’s account is also sometimes referred to as an investment Junior ISA. Both types of accounts offer the same basic advantages, with the interest being earned from either account being completely free of income tax, and with the opportunity for anyone, including grandparents, aunts and uncles and family friends being able to pay into the child’s account.
Every child can either have one cash ISA, one in stocks and shares or can have one account for each of these services. With these accounts, total saving limit is set to £3,600 . So if your child has single account each for cash ISA and shares ISA, you still has the limit at £3,600 . So the best approach would be to distribute your saving in £1,800 chunk for each account type.
Lloyds TSB is offering Junior Cash ISA in UK, where you can earn a variable interest rate of 3.00% which is also tax free.The minimum amount for the saving account starts from £1.The Junior Cash ISA plan is available for the children of age under 18 years who do not hold or were not entitled to hold Child Trust Fund.
The maximum saving limit is £3,720 in a single tax year. Deposit can be made by family member, friends or technically anyone. You cannot withdraw the money, until the child is 18,when the accounts matures into an adult cash ISA.
In short, Junior Cash ISA plan from Lloyds TSB is one the best child saving plan being offered in UK. You can also find the best ISA option with them.