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Autumn Budget 2017: boost for Junior Isas

The Junior Isa allowance is set to increase from April 2018

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.

 

How else can I boost my savings?

NS&I

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


Lifetime Isa

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?

Isa allowance

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
2016/17 £15,240 n/a £3,000 £4,080
2017/18 £20,000 £4,000 £3,000 £4,128
2018/19 £20,000 £4,000 £3,000 £4,260

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.

Please note that the information in this article is for information purposes only and does not constitute advice. Please refer to the particular terms & conditions of a provider before committing to any financial products.

Categories: Money, Savings & Isas

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