The tax-free allowance for Child Trust Funds and Junior ISAs was due to increase to £3,840 from the new tax year on the 6th April, however there was welcome news from the Chancellor in his budget statement that the limit will increase to £4,000 a year from July 2014. The result is that there will be two rises in the same tax year, so now there the limit is £3,840 until July, when it will rise to £4,000.
There was no mention of plans to allow parents with Child Trust Funds the choice of transferring them into a Junior ISA from April 2015, so these look to be proceeding as announced by the Chancellor at the end of last year.
Child Trust Funds have become uncompetitive when compared to Junior ISAs since the Government stopped making an initial contribution into them with millions of children trapped in these “zombie” accounts.
Since 2011, children under the age of 18 have been allowed to open Junior ISAs instead, but parents with Child Trust Funds were not allowed to open Junior ISAs for their children, or transfer the money across.
The advice to parents and grand-parents is to continue saving in CTFs until April 2015, when they can be converted into ISAs.
To help you find out where your Child Trust Fund account is held you can complete a form on the HMRC website. http://www.hmrc.gov.uk/tools/childtrustfundclaim/ctfaccount.htm
To see why you should consider transferring to The Children’s ISA visit our homepage and for more information on the range of funds available visit: www.thechildrensisa.com