The Treasury's consultation on merging CTFs with Junior Isas finished on 6 August 2013 and three months later there is still no sign of a decision being made. The Treasury says it will report the outcome of the decision "in due course" - hopefully this will be the Autumn statement in December, but we don't know for sure.
So what are parents of the CTF generation to do? Some of these children could have tens of thousands invested already. So a self-select stockbroker would be the best option. But you should pick one that offers a good value Junior Isa so that you won't have to transfer it again if CTFs are allowed to merge with Junior Isas.
The annoying thing about hunting for the best Junior Isa deal is that it is very difficult to compare charging structures. Below is my attempt to simplify the charges of a few offerings suitable for parents and grandparents who want investment flexibiltiy. Note that many options come with annual administration charges.
You need to consider what sort of investments you want to hold. If you are thinking of investment trusts, then you may be better off stopping contributions to the CTF or Junior Isa and taking out an investment trust savings scheme instead. These schemes are limited to the investment trusts of one provider though, so won't be for everyone. But the charges can be much lower.
Also, minimum investment levels can be lower. For example, the F&C Children's Investment Plan has lower minimum investment levels than the F&C Junior Isa.
The benefit of an investment trust savings scheme is that income from investments made by grandparents, other relatives and friends is taxed as the child's - which usually means it is tax-free. Plus, it the child's chargeable capital gains do not exceed their capital gains tax allowance there will be no tax to pay. The schemes also give parents and grandparents the flexibility to decide if and when the child should receive the money being invested. With a CTF or Junior Isa this is not an option - the money is passed on to the child automatically.
Selection of best Junior Isa and CTF providers for active DIY investors
| Provider | Transfer in fee | Administration charge | Transfer out fee | Dealing charges |
| Alliance Trust Savings | Free | £10+VAT per quarter. | £20 per holding | £12.50 per trade. If you hold Alliance Trust Plc you may be eligible for discounted dealing charges. |
| Charles Stanley Junior Isa (shortly to launch) | na | 0.25% annual platform fee | na | £10 trading fee. Many funds have clean commission free AMC of 0.75% |
| F&C Junior Isa* | £12 +VAT per holding | £25 +VAT per year | £12 +VAT per holding | Purchases 0.5%, sales nil. |
| Hargreaves Lansdown Junior Isa | Free | £45 a year maximum. 0.5% for shares, ETFs and investment trusts. Some funds free, others subject to £1 or £2 monthly platform fee. | £25 per holding | Share dealing: £11.95 per trade (0-9 deals in previous month). Lower charges for more frequent dealing. |
| Pilling & Co Non-Stakeholder CTF | Free | £13.50 annual cost per security | Free | 1.65% of first £10,000 value per deal and 0.5% thereafter (min £10). Min £10 commission on funds. |
| Pilling & Co Junior Isa (execution only) | Free | None | £24 per security | Minimum charge £10, 1.65% on the first £10,000. Lower charges for larger amounts. |
| Redmayne-Bentley Junior Isa and CTF | na | £20 + VAT per year. | na | Minimum £10. 1.65% per transaction plus 'settlement and compliance' charge of £7.50. |
| Selftrade self-select shares CTF and Junior Isa | na | £8.75 + VAT per quarter trading inactivity fee. | na | £12.50 per trade. No dealing fee for funds. Regular investments from £1.50. |
| Sippdeal Junior Isa | nil | nil | £20 per holding | Regular investing nil for 8000+ open-ended funds, £1.50 per trade for regular investing in ETFs and investment trusts. Online dealing for shares is £9.95 per deal (0-9 deals in previous month) or £4.95 per deal (10 or more deals in previous month) |
| The Share Centre CTF - Child Investment Account | nil (normal dealing fees apply) | 0.5%+VAT (min £10) per quarter | nil (normal dealing fees apply) | 1% purchase or sale commission (min £7.50), 0.5% regular investing fee (min £1), 0.5% automatic investment fee (min £1) |
| The Share Centre DIY Junior Isa (Standard) | Free | £1+VAT per month | £20 plus £25 per holding | 1% per deal (min £7.50), regular investing 0.5% (min £1), automatic reinvestment 0.5% |
| Walker Crips Stockbrokers Junior Isa and CTF | nil | nil | £20 per stock | Minimum charge £25, 1.65% on the first £10,000. 0.5% over £10,000. £3 compliance charge per transaction. |
Source: Investors Chronicle using providers' websites.
Notes: *Offers access to F&C investment trusts only.
