For parents looking to put money aside for their children’s future, the ISA allowance for tax year (as announced in the Budget on March 11th) should allow considerably more savings in their tax-free wrapper.
What is a JISA?
A JISA is an ISA (a tax-free wrapper) which can be opened by parents or guardians for their children.
The Government’s Budget was announced this past Wednesday (March 11th 2020) when Chancellor Rishi Sunak took to the podium in the House of Commons.
He put forward the Government’s tax and spending plans for the upcoming tax year (year 2020/2021).
In this speech, the Government laid out their plans for the ISA allowances for the upcoming tax year – including the ISA allowance limit for 2020/2021, which will remain at £20,000 – the same as the previous two years.
The biggest point of discussion concerning ISAs dominating the news headlines is that of the announced increase to the Junior ISA (JISA) allowance.
The previous year’s ISA allowance set the upper limit for the amount you can put into a JISA at £4,368 per year.
What is the new limit?
In tax year 2020/2021 (which will start on April 6th 2020), this will increase to almost double; the new upper limit will be £9000 per tax year. This is a high amount to have to spare – but for those who do, and want to put this into a tax-efficient savings fund to save for their child’s future, this is excellent news.
What difference will this make?
This will make a huge difference for parents who are saving or looking to save large amounts towards their children’s future, enabling them to put aside more than double what was allowed in previous years within the tax-free ISA wrapper. JISAs can be hugely beneficial for young people when they are taking their first steps into life, funding university fees or maintenance, helping pay for a first home etc.
In the official Budget document, the Government stated that, “By saving towards their future, families can give children a significant financial asset when they reach adulthood – helping them into further education, training, or work.”