Child on a dads shoulder

Child savers look set to miss out on upwards of £3m a year after high street banks but their Junior ISA rates.

The average Junior ISA rate is now down to 1.91% from 2.4% in January, according to Moneyfacts.

The average 0.55 per cent cut equates to £3m in lost interest payments on this new money alone.

This comes just weeks after Chancellor Rishi Sunak doubled the annual amount parents could pay in from £4,368 to £9,000 in his March budget.

What is a Junior ISA

With the number of adults opening a Junior ISA increasing by 113 per cent against the same period last year, it is clear the Junior ISA remains a popular savings vehicle.

The money can be put into shares or cash. It is then locked away until the child reaches 18 years of age (though children can start managing their account on their own from 16) and any earnings will not be taxed.

Parents, or guardians with parental responsibility, open and manage the account but the cash belongs to the child.

Any adult can add to the account as long as the total going into it does not breach the £9,000 annual limit, which runs until April 5 next year.

Despite low rates, cash remains by far the more popular choice for parents with seven in ten of the 954,000 opening a Junior Isa in the tax year April 2018 to 2019 picking the cash version.

Until recent weeks, the Junior ISA had offered a safe haven with a good return. It may be worthwhile considering establishing alternative investments with a higher return.

Seek professional advice

An independent financial advisor will be able to look at broader options for individual circumstances.

For more information contact Becky Hammonds on 07969 269677 or email becky@willowfs.co.uk 

 

By Published On: 19 August 2020Categories: Advice, Investment, Wealth0 CommentsTags: ,