Tax advice of the week: Build a nest egg with a Junior Isa

published 21 January 2011

Junior Individual Savings Accounts (JISAs) are to replace child trust funds (CTFs), which closed to new entrants on 31 December 2010, says Nick Braun in Business Tax Saver. Unlike CTFs, JISAs will not receive contributions from the government. But the limit for them is expected to be higher than the £1,200 annual limit imposed on CTFs.

They're currently only being made available to children born after 31 December 2010 and older children born before 1 September 2002 who never qualified for a CTF. But the government may make them available to any child, irrespective of whether they have a CTF or not.

JISAs are useful from a tax point of view. Children are entitled to income tax personal allowance of £7,475 for the 2011/2012 tax year. But if a parent (rather than, say, grandparent or friend) gives money to their own child and the income generated exceeds £100, it'll be taxed as if it were the parent's. Money is locked away until your child's 18th birthday, but if you want to build them a nest egg, it could make sense to shelter it in a JISA. They're due to launch this summer.