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Families looking to place money in a Junior Isa will now be able to put away twice as much for their children in the tax-friendly accounts. 

Rishi Sunak, the chancellor, said in the Budget that the annual Jisa investment limit would rise in April from £4,368 to £9,000.

Under the new allowance, a parent or grandparent who begins saving for a newborn child in a stocks and shares Jisa would be able to build up a £308,187 fund by their 18th birthday, assuming a 5 per cent annual return and a 2 per cent increase in the annual limit.

Before the change, a Jisa holder could expect their investment to be worth just £149,574 over the same period.

“An upper limit of £9,000 means that Junior Isas are now a serious tool to save and invest for their future,” said Ed Monk, associate director for personal investing at Fidelity International. 

The jump is the biggest in the Jisa threshold since it launched in 2011. The government said the change was part of its commitment to “helping hardworking people”.

The tax-advantaged savings accounts are designed to help parents put away money for their children and encourage long-term savings habits. A Jisa can be opened on a child’s behalf until the age of 16 and they can withdraw the funds when they turn 18.

However, personal finance analysts note that the average contribution to Jisa accounts of around £1,000 is far short of the current limit, so take-up of the new allowance is likely to be limited. 

“The move to hike the Jisa allowance but keep the main Isa and Lifetime Isa rates the same means it only benefits a smaller group of people — making the move cheaper for the government,” said Laura Suter, personal finance analyst at AJ Bell.

“Being able to invest £9,000 a year per child is pie in the sky for most,” said Moira O’Neill, head of personal finance at Interactive Investor, the UK investment broker.

Research by Hargreaves Lansdown found that the great majority of those who received control of a Jisa at the age of 18 still had the money invested a year later. 

“Children’s first experience of money is often debt as they leave school,” said Sarah Coles, personal finance analyst at Hargreaves Lansdown, the UK’s largest investment platform. “This gives them the opportunity for their first experience with money to be more positive . . . They are using this money very sensibly.”

In spite of coronavirus-related volatility, parents have continued to top up Jisas for their children over the past two weeks, Hargreaves said. “People can see that they have an 18-year time horizon, whereas they may be less certain about their own investments,” said Ms Coles.

A 2019 study found that 35 per cent of parents were saving for their children through a cash Jisa while 11 per cent saved in a stocks and shares Jisa. 

Jason Hollands, managing director at Tilney Group, said cash was a poor long-term home for wealth because of the corrosive effects of inflation. “While stock markets are certainly enduring a difficult ride at the moment as coronavirus causes havoc, they have repeatedly thrashed cash over the longer term,” he said.

Jisas replaced child trust funds in 2011, but those who hold the trust funds for their children will still benefit from the increase. The adult Isa savings limit of £20,000 remained unchanged.

Other measures related to children in the Budget included help for parents of an estimated 500,000 school-aged children to access the tax-free childcare accounts which assists with the costs of childcare. The government said it was making it easier for parents to pay for school care before and after school via the TFC account, under which the government adds £2 for every £8 that parents pay in.

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