NS&I has launched a new Junior ISA which will offer a 2% tax free interest rate.

The account has a maximum subscription limit of £4,128 for 2017/18 and can be opened and managed through the company’s website.

Anyone can make a deposit into the child’s account with NS&I, but it must be opened and managed by a person with legal responsibility for the child, until they reach the age of 16. Once aged 16, the child can then apply to take control of the junior ISA.

NS&I’s junior ISA also comes with a 100% capital security guarantee and there is a minimum deposit of £1.

As part of the ISA, all deposits will be electronic and communications with customers will be paperless.

NS&I’s acting retail director, Jill Waters, said: “More money is now deposited with NS&I online than any other individual sales channel and our Junior ISA offers parents a simple and modern account for their children’s savings. This tax-free account will allow £4,128 to be invested, over this tax year for children aged under 18 with NS&I’s 100% capital guarantee.

“Our new Junior ISA will also allow third-parties to deposit in to the product electronically, which means that grandparents and other relatives and friends of the child or family can add additional funds once the account has been opened.”