‘Junior Isa’ scheme to replace CTFs

A tax-free “Junior Isa” - individual savings account - for parents to save for their child’s future has been given the go-ahead by the government, following its scrapping of Child Trust Funds (CTFs) in the summer.

The new accounts are due to be available from autumn 2011 but, unlike CTFs, will not benefit from government contributions. The annual contribution limit is likely to be a few thousand pounds, investable in cash or stocks and shares.

Money put into Junior Isas will be owned by the child and will be locked in until adulthood, said the Treasury.

The CTF scheme, whose abolition is to save half a billion pounds a year, involved government contributions of up to £500 per child. The last investment vouchers are to be issued for babies born by December 31 this year. Eligibility for Junior Isas will be backdated to the beginning of 2011, said the Treasury.