The amount you can save in a Junior Isa will be going up from April 2018.
The past year has seen a number of important changes for savers, including the introduction of the Lifetime Isa, the launch of a new NS&I savings bond, and the increase in the Isa allowance to £20,000.
Today’s Budget was a quieter affair, but it has been confirmed that the Junior Isa allowance will increase from April 2018.
What is a Junior Isa?
Junior Isas are tax-free savings accounts for under-18s. They can be opened by the parents or guardians of children born on or after 3 January 2011, or before 31 August 2002.
The current annual allowance stands at £4,128, but it was announced at today’s Budget that this will go up to £4,260 from April 2018.
Money placed into a Junior Isa can be accessed once the child turns 18. After this point it will become a full Isa subject to the adult threshold of £20,000.
- Find out more: Junior Isa rules and allowances.
How else can I boost my savings?
In his spring statement earlier this year, the chancellor confirmed the much-anticipated introduction of a new bond for savers. The Guaranteed Growth Bond from National Savings and Investments (NS&I) became available in April 2017 and pays a 2.2% fixed rate of interest.
Open to people aged 16 and over, the bond allows deposits of between £100 and £3,000 and requires savers to lock their money away for three years.
The rate remains competitive, but – like most savings accounts – it fails to match the current rate of inflation, which has reached a five-year high of 3%.
Find out more: how to find the best savings accounts.
The Budget in 60 seconds
Which? Money expert explains the main Budget announcements
A new Isa product was also introduced from April 2017 to help people under 40 save for their first home or build a retirement pot, which would be boosted with a government bonus.
The lifetime Isa (or Lisa) is a tax-free savings or investments account which allows adults aged 18-39 to save up to £4,000 a year. For every £4 saved, the government will add £1 (worth up to £1,000 every tax year until the saver turns 50).
The bonus will be paid annually in the first year of the Lisa but from the 2018/19 tax year onwards it will be paid every month, allowing savers to benefit from compound growth.
It made a welcome addition to the range of Isas already available including cash Isas, stocks and shares Isas, Junior Isas. Help to Buy Isas and innovative finance Isas.
Find out more: what is a lifetime Isa?
In April 2017, the allowance for adult Isas increased from £15,240 to £20,000. This is set to remain at the same level for the 2018/19 tax year.
It is possible to split your allowance across Isa multiple products. For example, you could put half in a cash Isa and half in a stocks and shares Isa. Remember that your allowance does not carry over into the next tax year, so consider topping up where possible.
How the Isa allowances vary
|Adult Isa allowance||Lifetime Isa allowance||Help to buy Isa allowance||Junior Isa allowance|
Find out more: What are different types of Isa?
For the latest updates on the Autumn Budget 2017 take a look at our Which? Money round up.
- Want to share your views on the Budget? Join the conversation.