10:01 22 March 2013
Junior ISAs replaced child trust fund as of November 2011. Children who were born on or after January 1st, 2011, are eligible to open Junior ISA.
Junior ISAs are basically the same as regular cash ISAs. The only difference is the annual contribution limit. Aside from that, they function similarly. Both are savings and investment wrappers, which shield your child’s savings from both income and capital gains tax.
There are two different types of Junior ISA and these are the following:
The interest you earn from stocks & shares ISAs are tax-free. However, the prices of the stocks and shares that you’ve invested may go up and down. Thus, there is a risk of losing not just the interest but also your capital.
The annual contribution limit is £3,600. This amount can be placed on cash Isa or stocks & shares Isa. It can also be split between the two types.
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