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Junior ISA: Nationwide explain benefits of setting up account
Child Trust Funds were originally set up for children born between September 2002 and January 2011. They can have up to £9,000 saved into them a year and the money held within them will officially belong to the child being saved for. The money can only be taken when the child in question turns 18 but they can take control of the account when they turn 16.
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Today, the HMRC revealed that millions of teenagers are set to benefit for the first time from the money held in CTFs.
They detailed that since 2002 around 6.3 million CTF accounts have been set up, with roughly 4.5 million being opened by parents or guardians with the remaining 1.8 million being set up by HMRC themselves where parents did not open an account.
This could mean that some children may not know that there are accounts in their name and as such, are unaware that money is waiting for them.
From September 1, the oldest children affected by CTFs will turn 18 and be able to access their money.
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Junior ISAs were launched to replace CTFs (Image: GETTY)
HMRC explained that around 55,000 accounts will mature each month beyond this and as such, they have created an online tool which can help young people find out where their account is held.
John Glen, the Economic Secretary to the Treasury, provided the following comments along with HMRCs announcement: “We want to make sure all young people can access the money which has been set aside for them, to invest in their future and continue a savings habit, as they turn 18.
“If you’re unsure if you have an account or where it may be, it’s easy to track down your provider online.”
This is important to note as it should be remembered that CTF accounts are not actually held by HMRC but are spread across various providers.
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HMRC have made the ability to hunt down CTF accounts easier by changing some of the rules associated with them.
They recognised that the online form that they provided to customers to trace their CTFs requires a level of identity verification that many 16 to 18 year olds will not have.
As such, they will now allow the children to access the form with just their National Insurance number.
For those who wish to continue adding money into a CTF, they’ll be able to do so by cheque, standing order or direct debit for stakeholder accounts.
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Savings or share accounts may have different methods for deposits and as such the holders will need to check with the providers.
Some children may be being looked after by local authorities and have had a CTF set up on their behalf.
These kinds of accounts will be managed by the Share Foundation who will:
- write to the child when they take control of the account
- change the type of CTF account and provider if necessary and write to the child to explain why the change was made
- send account statements to the child
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Junior ISAs can be opened by those who do not have a CTF but are looking to build up a nest egg for their children.
Junior ISAs can have up to £9,000 saved into them in the current tax year and the child being saved for must be under 18 and be living in the UK.
These accounts can be opened with a range of banks, building societies, credit unions, friendly societies and stock brokers.
Children can have either a cash or stocks or shares ISA but they’ll only be allowed to have one of each as a maximum.
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