Best Junior Cash Isa 2014
Easy access accounts make a great starting point for your children's savings, but if you're worried about them paying tax on their interest, or simply prefer an account that they can't dip in and out of, Junior Isas make a great long term savings vehicle.
Junior Isas are available for all children born after 3 January 2011 or before September 2002 (meaning those who don't have a child trust fund), you can save up to £3,720 into a junior cash Isa the current tax year (rising to £3,840 in 2014/15) without paying any tax on the interest. The child can only access the money when they turn 18.
The winner is the reliable Coventry Building Society. "The account was launched on 5 April 2012 and since then has paid a straightforward rate of 3.25% - no bonus, no complications, just consistency," says judge Anna Bowes, director of Savingschampion.co.uk.
Even though the Halifax Junior Cash Isa only takes the silver medal, it should be the first choice for any children whose parents have an Isa with the bank. Bowes explains: "We simply cannot ignore a rate of 6%, which has been the rate since its launch in February 2012, but in order to achieve that rate the parent also needs to have a Halifax Isa.
"Having said that, Halifax's basic Junior Isa, which doesn't require the adult to have a cash ISA too, also pays a really competitive 3%."
Best Junior Cash Isa 2014
WINNER: COVENTRY BUILDING SOCIETY JUNIOR CASH ISA
Current rate: 3.25%
Minimum deposit: £1
Contact: 0845 766 5522
HIGHLY COMMENDED: HALIFAX JUNIOR CASH ISA
Available from 1 November 2011, the Junior ISA will replace child trust funds (CFTs), which have been phased out. Junior ISAs will have a £3,000 limit and will be offered by high street banks, building societies and other providers that currently offer ISAs to adults. You can invest in either stocks and shares or cash. But, unlike CTFs, there will be no government contributions into each child’s savings pot. Money invested in Junior ISAs will be “locked in” until the child is 18, and the ISA will default to an adult one.
Invidivual Savings Accounts were introduced on 6 April 1999 to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs) with one plan that covered both stockmarket and savings products, the returns from which are tax-exempt. The ISA is not in itself an investment product. Rather, it’s a tax-free “wrapper” in which you place investments and savings up to a specified annual allowance where the returns (capital growth, dividends, interest) are tax-exempt (you don’t have to declare ISAs and their contents on your tax return). However, any dividends are taxed within the investment, and that can’t be reclaimed.
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.