Parents missing out on CTF tax breaks - Savings - News - Moneyfacts

News

Moneyfacts.co.uk News brings you the latest financial & economic news & reviews of the best products in the UK by our team of money experts.

Parents missing out on CTF tax breaks

Parents missing out on CTF tax breaks

Category: Savings

Updated: 23/02/2010
First Published: 23/02/2010

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Parents will waste £63 million in tax breaks by not making full use of their children's Child Trust Funds (CTF) allowance this year, new research has revealed.

Only a quarter (24%) of the CTF accounts opened since their launch in 2005 have welcomed additional deposits, while a paltry 1% have received the maximum funding of £1,200 per year, according to Unbiased.co.uk.

The website claims that even if only half of the CTFs which had received no extra funding besides the initial £250 voucher had been topped up to the maximum amount, the additional tax saving would amount to £63 million in total.

Meanwhile, the research also showed that just three quarters (72%) of eligible children have had a CTF account opened for them.

Although around 4.3 million CTF vouchers have been issued since the accounts were introduced, only 3.1 million accounts have been opened.

"The Government introduced Child Trust Funds as a way of helping parents plan for their children's futures," said Karen Barrett, the website's chief executive.

"However, our research has shown that parents are not making the most of this opportunity. Parents don't have to pay tax on the interest earned on a CTF account and by not using their full funding allowance each year they may potentially be gifting the taxman more money than necessary."

Find the best savings accounts for you - Compare child trust funds

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

Related Articles

Just 44 savings accounts beat inflation

Inflation recorded another large jump during December, and predictably, this has had a devastating impact on the number of savings accounts that beat it, so much so that you’ll need to lock your money away if you want an inflation-beating return.

Just 47% have money in a savings account

We’re often told of the importance of saving, yet unfortunately, the message doesn’t always get through. Indeed, research shows that just 47% of those surveyed have money in a savings account, and 17% have no savings or investment whatsoever.

How much will you save this year?

Many of us have set savings goals for the year ahead, and planning to budget better and save more will be at the top of many financial resolution lists. But how much are you hoping to squirrel away? Encouragingly, many people have impressive targets.
 
Close