Following the closure of the government-backed Child Trust Funds to new applicants in January 2011, there's been little real choice if you want to save for your child's future.
However, in November 2011 the new Junior ISA was launched to come to the rescue of parents across the UK and once again provide a tax free haven for your children's savings.
Here's what you need to know about the new tax free Junior ISA savings accounts:
What is a Junior ISA?
A Junior ISA, or a Child ISA, is a type of children's saving account designed specifically to replace Child Trust Funds and encourage parents to put money aside for their children's future.
The government have confirmed that a Children's Junior ISA works in a very similar way to existing adult ISA savings accounts, and the main benefit of Junior ISAs is that any interest or profits earned from the money inside is tax free.
When did Junior ISAs become available?
The Junior ISA was launched on 1st November, 2011.
Who can open a Junior ISA?
Junior ISAs are available to any child under the age of 18 who did not qualify for a Child Trust Fund account.
This means if your child was born on or after the 3rd January, 2011, or before 1st September 2002 they are eligible to open a Junior ISA account.
If your child has a Child Trust Fund they're not be eligible for a Junior ISA, nor can they transfer any savings they have in an existing Child Trust Fund to a Junior ISA.
Can grandparents invest in Junior ISAs?
Anyone can deposit money into a Junior ISA on a child's behalf, however it is only the parent or legal guardian of the child that can open an account or transfer it to a different provider on their behalf.
What is the Junior ISA limit?
The Junior ISA allowance for the 2015/16 tax year is £4,080.
Switching Junior ISAs between providers
Each child can hold one cash Junior ISA and one investment Junior ISA. However, the £4,000 limit will need to be shared between the two accounts.
For example, if you save £2,500 for your child in a cash Junior ISA, you are only be able to invest the remaining £1,500 of their allowance through an investment junior ISA account.
Unlike adult ISAs, children will only be able to hold one cash Junior ISA account and one investment Junior ISA account in total - they will not be able to open and contribute to new accounts each tax year.
However, it will be possible to transfer savings between Junior ISA providers to ensure that their future savings are getting the best return possible.
It will also be possible to switch savings from a cash Junior ISA to an investment Junior ISA should you wish to do so.
Can you have a Child Trust Fund and Junior ISA?
You cannot open a Child Trust Fund and a Junior ISA account for the same child; this is because the Junior ISA is the government's direct replacement for Child Trust Funds and only open to children who don't qualify for a Child Trust Fund.
Can you transfer a Child Trust Fund to a Junior ISA?
You can now transfer a Child Trust Fund into a Junior ISA but not vice versa.
Can you access money in a Junior ISA?
Under Junior ISA regulations, neither children nor parents are allowed to withdraw money from a Junior ISA until the child turns 18.
Parents or legal guardians are responsible for opening and managing Junior ISAs for their children until they reach the age of 16.
After this a child will be able to manage their Junior ISA savings themselves. However, they will not be able to access the cash until they turn 18.
Once a child turns 18 they are free to withdraw money from their Junior ISA.
If they decide to leave their savings in their Junior ISA, their accounts will automatically turn into standard adult ISAs.