Halifax JISA Update: July 2013
26 July 2013
- Children miss out on £5bn tax free savings
In response to HMRC’s most recent ISA Statistics published today (26 July 2013), Halifax research reveals an estimated annual shortfall of £5.1bn in unused Junior ISA (JISA) allowances with children continuing to miss out on the benefits of tax free savings.
- Two thirds (66%) of people still do not know what a JISA is
- Parents are prioritising their own savings above their children’s
- Only 10% of JISAs were fully funded in 2012/2013
- Halifax 6% JISA has retained market leading status for 17 months
Today’s publication of HMRC’s updated ISA Statistics showed a 238% increase in JISA subscriptions since last year, with a total of 295,000 JISAs open at the end of the 2012/2013 tax year compared to 71,000 at the end of 2011/2012.
Halifax, which has retained a market leading status since launching its market leading 6% JISA in February 2012, now has over 80,000 Cash JISA customers, providing 40% of all Cash JISAs.
Just 15% of parents whose children qualify for a JISA have opened one. Of those who have, only 10% managed to save the full allowance in 2012/2013 (£3600), with the same proportion committed to utilising the total 2013/2014 allowance of £3,720.
The current shortfall highlights not only the unused allowance of existing JISA customers, but also the missed opportunity of parents with children who qualify for a JISA but do not have an account.
Richard Fearon, head of Halifax Savings, says:
“When HMRC’s figures came out last year there was a consensus that, on the whole, Junior ISAs had not made the immediate impact expected, however our Junior Cash ISA is a clear demonstration that there is the opportunity for innovation in this market and a potential to further encourage positive savings habits from when children are young.
“It is important for parents to also consider the longer term tax free benefits JISAs provide. Not only do they protect your children’s savings from any tax that would otherwise be due on the interest earned, but JISAs also provide a great head start when the child grows up, with the account retaining its tax free status when it matures into an adult Cash ISA.”