It has been announced that Junior ISA accounts are to become available from 1 November this year.
There has been much speculation about the tax free savings accounts for children since the coalition Government phased out Child Trust Funds (CTFs) after it took power last year.
The new Junior ISAs will have an annual contribution limit of £3,000 – equating to around £250 per month.
All children who do not have a CTF will be eligible for the accounts, which are expected to be offered by all high-street banks, building societies and other providers that offer standard ISAs.
Children will be able to have one cash and one stocks and shares Junior ISA at any time, as long as the combined annual contribution doesn't outstrip the £3,000 limit.
It has also been announced that from November, the annual limit for those children who have already been given a CTF will rise from £1,200 to £3,000, aligning the limits for Junior ISAs and CTFs.
While the Government will consult with relevant parties, it is expected that six million children will be eligible for the ISAs when they launch, with a further 800,000 becoming eligible the following year.
Funds saved in the ISAs will be locked in until the child reaches 18, at which point the account will become an adult ISA.
The Financial Secretary to the Treasury, Mark Hoban MP, said that the new Junior ISAs are a great example of a simple clear and jargon-free financial product that allows families to save and invest for their child's future.
"They allow parents and family friends to contribute to children's savings and will strengthen the savings culture," he added.
Russell Galley, managing director of Savings at Lloyds Banking Group, said: "We all know that instilling the savings habit from a young age is important. Equally important is creating the environment to help nurture a longer term approach to savings in a straightforward and simple way."
"The combination of these two in the new Junior ISA is a very positive step towards helping parents teach their children the value of building a nest egg for the future."
The Government is currently welcoming feedback on its plans and will make its final regulations in July this year.
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