The new JuniorIndividual Savings Account (ISA) which was announced at the end of last year and set to replace the Child Trust Fund is to be launched on 1 November 2011.
According to the coalition government, the tax-free Junior cash ISA will provide a tax free haven for parents to save up to £3,000 per year - significantly higher than the £1,200 allowance applied to the Child Trust Fund which was recently scrapped.
In last May's Budget we first caught wind of government plans to axe Labour's Child Trust Fund, and before long this became one of the highly controversial and high profile spending cuts put in by the coalition government.
Under the previous saving scheme, children born after September 2002 qualified for a £250 voucher that could be invested into a Child Trust Fund account, locking it away until the child's 18th birthday.
However, this amount was cut to just £50 following the governments decision to pull the scheme from the start of 2011. Plans to provide an additional payment when children turned seven were also stopped.
Babies born this year are no longer eligible for the vouchers. However, parents have been given a savings incentive - currently allowing them to contribute up to £1,200 a year without paying any interest on the returns.
The Junior ISA is to be made available to all children aged under 18, including those that were born before the Child Trust Fund was launched, however, children that already have a Child Trust fund cannot open an ISA.
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