Peppa Pig does so loves muddy puddles. If you have some idea of what I am taking about then you either have young children or you, like me, delight to be a grandparent of young children. I often think that if Peppa Pig could be employed by the Financial Services Authority to teach children the basics of savings and financial planning, then it would help people avoid a lot of fundamental financial mistakes later in life.
The New Junior ISA
My excuse for introducing this particular Arch blog with Peppa Pig is the new Junior ISA which became available from 1 November 2011. The Junior ISA is a worthy replacement for the Child Trust Fund (CTF) which signally failed to catch the imagination of parents. One in four parents who received the CTF voucher of £250 (that is nearly 350,000 people) failed to invest it within the twelve month deadline! Although, as one fund management company was quoted at the time “leaving the £250 in cash would barely buy a round of drinks on the child’s 18th birthday”.
The Junior ISA is quite different – for a start there is no gimmicky voucher. It is very similar to the ‘adult’ ISA in that parents, grandparents, or indeed anyone else with an interest in the child’s welfare, can invest up to a total of £3,600 each tax year (index linked from April 2013). With an 18 year investment period for a new baby and using conservative estimates then there could be getting on for £100,000 in an ISA account by the time the child reaches his or her maturity. This is then rolled over into an ‘adult’ ISA to which normal ISA rules apply.
For parents and grandparents who use ISAs for their own wealth creation, the ability to start investing in a tax efficient manner much earlier than the current age 16 or 18 will be very attractive. Of course, it will also help to reduce their own inheritance tax liability especially those with a good number of children and grandchildren.
We have produced a new Guide: Junior ISAs which you can download or print from our website at www.arch-fp.co.uk/junior_isas.php.
If you would like to discuss investment planning for your children/grandchildren please ask your usual Arch adviser or telephone 01483 204600 or email enquiries@arch-fp.co.uk.
Christmas Greetings
May I take this opportunity on behalf of the directors, advisers and support team to wish all of our clients and blog followers a Very Happy Christmas and a Peaceful and Prosperous New Year.
Our offices will be closed from 1.00pm on Friday 23rd December and will fully open again on Tuesday 3rd January, although there will be a small number of staff in the office on 29th and 30th December.