You are possibly as irritated by the Halifax “ISA ISA baby” TV advert as me. For once there is now an actual baby ISA – though the Government are calling it a “Junior ISA”. It will be launched in November and allow parents or children to invest up to £3,000 per tax year. This is meant to be a replacement to the Child Trust Fund – which provided a new baby with £250 and the ability to save £1200 a year into it. This has now been scrapped by the Coalition Government. If you have one (or more accurately your child has a CTF) you (or s/he) cannot have a Junior ISA, but to fair things up, the limits for pre-existing CTFs have been raised to the same £3000 level.

So this is one for the University fees… well it could be, in practice the child will be able to get their hands on the money as soon as they turn 18.. which for many 18 year olds may be one temptation too far. The advantage of this new system is that there are no restrictions on the investment. It can be a proper investment portfolio and/or cash.  At the moment 16 year olds can have a Cash ISA but not a stocks and shares ISA until aged 18.

Most of the financial services industry will welcome this new initiative (a way of getting people in the habit of saving and of course getting paid for investing the money). In practice or rather reality, the frightening truth is that most people are not even saving £300 a month towards their own pension, let alone their children’s future. So I doubt that this will be a big earner for the financial services industry and will invaribably be one of several options for families with reasonable wealth to use – but not the majority.

Of course we will wait to see who decides to offer this product to clients and the detail, which I cannot find anywhere on the HMRC site – except one document, which says relatively little of note.

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