A welcome move to help junior savers

In one of his few helpful moves for savers, the chancellor has proposed that money locked in Child Trust Funds will be allowed to be switched into a Junior Isa.

"It's time to get angry about child trust funds", wrote Merryn Somerset Webb at the end of February. The previous Labour government introduced the scheme with a £250 incentive (paid for by the taxpayer) to encourage parents to save on behalf of their children. Up to £3,600 per year could be set aside tax-free either as cash, or in the form of stocks and shares for under-18's. But although this scheme sounded sensible enough, it rapidly became apparent to anyone who opened a CTF that fund choices were limited and investment costs high.

So, in one of his first moves as chancellor, George Osborne abolished them and replaced them with the superior junior Isa. However, he left many investors, including Merryn, fuming by barring access to the new Jisa (basically a children's version of the adult Isa) to anyone who had already set up a CTF. As Merryn wrote at the time, "children born after January 2011 and before September 2012 have access to a tax-efficient and flexible long-term savings product... while those born in the intervening months are stuck with inflexible, expensive products that self-destruct when they hit 18".

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up
MoneyWeek

MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.