BSA welcomes Government

BSA welcomes Government’s Junior ISA

BSA welcomes Government’s Junior ISA

Commenting on HM Treasury’s announcement of a new tax-free account for children – the Junior ISA – Adrian Coles, BSA Director-General, said:

“We welcome the introduction of Junior ISAs. It was a disappointment when the Government announced the end of the Child Trust Fund (CTF), so this is a small step towards filling that gap, although we recognise that the benefits to most children from a tax-free account without Government contributions will be small, at least initially.

“Mutuals are well placed to offer such accounts, with a long history of offering children’s savings and being the market leaders for cash-based CTFs. We look forward to working closely with the Government on developing the structure of the Junior ISA, which we hope will be less complex than that of the CTF.”

BSA views on the structure of Junior ISAs

. We believe it’s important that this new account is simpler than the outgoing CTF, which has administrative complexities. Reporting procedures should be on an annual basis, whereas the CTF is fortnightly. There should also be flexibility on when statements are sent, rather than prescribing on the child’s birthday, as with the CTF.

. Providers should be able to offer just one type of account if they so wish – unlike the CTF which has a stocks and shares bias. Accounts should be transferable between providers, and if savers are able to transfer between different types of account, this should be allowed both ways.

. We believe it would be simplest to align the contribution limits to those of cash ISAs, based on the tax year. Whatever limit is applied, mechanisms should be in place to increase this limit, for example, to take account of the effects of inflation.

. Accounts should roll over into an ISA on maturity, while the account holder should retain the discretion to move their balance into a different account, should they desire. There may also be merit in allowing the transfer of existing CTFs into the Junior ISA.

~ Ends ~

Notes to editors

. The BSA’s submission to the informal consultation by HMT can be viewed here http://www.bsa.org.uk/policy/response/childrens_savings.htm

. Photographs of Adrian Coles are available from the BSA press office, or from the Association’s website at www.bsa.org.uk or Headlinemoney www.headlinemoney.co.uk

. The Building Societies Association (BSA) represents mutual lenders and deposit takers in the UK including all 49 UK building societies. Mutual lenders and deposit takers have total assets of over £365 billion and, together with their subsidiaries, hold residential mortgages of almost £235 billion, 19% of the total outstanding in the UK. They hold more than £245 billion of retail deposits, accounting for 21% of all such deposits in the UK. Mutual deposit takers account for about 36% of cash ISA balances. They employ approximately 50,000 full and part-time staff and operate through approximately 2,000 branches.

Rachel Le Brocq
Press and Public Affairs Manager
The Building Societies Association
6th Floor, York House
23 Kingsway, London
WC2B 6UJ

Tel: 020 7520 5905
Mobile: 07773489644
Fax: 020 7240 5290
www.bsa.org.uk