New regulations for junior Isas have today been laid down in Parliament by the Government.

The limit on the tax-efficient accounts, to become available from 1 November, will rise from an initially-proposed £3,000 to £3,600.

The Government first unveiled plans for junior Isas in March this year, when it was estimated six million under-18s will be eligible when the accounts launch, with a further 800,000 eligible each following year (see the Full Isa guide).

Children will be able to save in a junior cash Isa, where the interest won't be taxed, and a stocks and shares junior Isa, where the returns are mostly tax-free.

Savers can have as much as they like in each account as long as the total saved or invested between them does not exceed £3,600 per tax year.

Junior Isas will automatically be converted to standard Isas when the child reaches 18. They will only be available to kids born in 2011 or later, or before 1 September 2002.

Anyone born between those dates is instead eligible for a child trust fund (CTF) which is also a tax-efficient vehicle, though this is closed to new joiners.

Child trust fund future

In March, the Government announced the limit for CTFs as £3,000 but it has today increased that in line with the junior Isa to £3,600 on 1 November (see the Junior Isa plans unveiled MSE News story).

The Government has not yet confirmed whether a CTF can be converted into a Junior Isa, instead stating further details will be announced later this summer.

The worry is banks may not offer their best rates to CTF holders as they are not available to new customers so there is little incentive to gain business.