Junior ISAs

The recent volatility of the FTSE 100 might make people wary of investing in stocks and shares, but this new tax-efficient product does have plenty of long-term attractions in the right circumstances. Your IFA can advise fully, but as far as the tax rules are concerned there is complete income tax and capital gains tax exemption with the main features being:

• Starting on 1 November 2011, with an annual limit of £3,600.

• Available for under-18s who were born on or after 3/1/11 or before 1/9/02. This covers all those not eligible to have a Child Trust Fund.

• Estimated 6 million initially eligible, with 800,000 new children per year after that.

• After 5/4/13 the £3,600 annual limit will be uprated in line with the CPI.

• The funds are held until the child reaches the age of 18 when it will automatically become an adult ISA. The child can manage the account from the age of 16.

• Grandparents could find this a useful way of helping their grandchildren and saving IHT at the same time, with the annual investment coming within the annual IHT exemption of £3,000 and/or normal expenditure out of income.