Thousands Of Child Trust Funds Could Go Unclaimed | moneyfacts.co.uk

Derin Clark

Derin Clark

Online Reporter
Published: 25/08/2020

Next month the first Child Trust Funds (CTFs) are set to mature, in which those turning 18 will be able to access their fund for the first time, but it is believed that thousands of CTF holders do not know they have one or have forgotten that one has been set up.

What are Child Trust Funds?

CTFs were set up by the Government and are a tax-free children’s saving account available to those born between 1 September 2002 and 2 January 2011. The parents or guardians of children who qualified for a CTF were sent a starting payment voucher of £250 (or £500 for those on a low income) by HMRC, which they could use to set up the CTF account in the child’s name.

Once the account was set up, further deposits could be added up to £9,000 (2020/21) each tax year.

The account is managed by a ‘registered contact’ who can:

  • tell the account provider how to invest the fund and run the account
  • change the address and other personal details
  • change the type of account, for example from cash to stocks and shares
  • move the account to another provider.

They cannot, however, withdraw money from the account. Instead the registered contact can transfer the funds into a Junior ISA (JISA). When the child turns 16 they can take over management of the account, but they cannot withdraw money until they turn 18. Once they turn 18, the account holder can withdraw the money or transfer it to a different savings account, for example an adult ISA, to continue saving.

If you are thinking of transferring your CTF to a new savings account, you can find all the current rates available on our savings and ISA charts.

How do you access your Child Trust Fund?

When the CTF was originally set up the parent or guardian should have received the child’s Unique Reference Number (this should also be on the annual CTF statement), and details of the account type and the provider. Regular account statements should have also been sent once the account was set up.

Once the child turns 16 they can take control of their account by contacting the provider. If they do not contact the provider, the account will remain managed by the registered contact. When the account holder turns 18 they can access their funds by contacting the provider.

How to find out if you have a Child Trust Fund

Some CTF accounts were set up by HMRC on behalf of the child, for example if the child was in care, and as a result many children turning 18 may not be aware that they have a CTF account. Those turning 18 can check to see if they have an account by filling out a form on the government’s website.

How to add money to your Child Trust Fund

Anyone can add money to a CTF account, not just the registered contact. Stakeholder accounts allow money to be added by cheque, standing order and direct debit. Those managing a savings or share account should contact the provider to find out how to add deposits to the account. The maximum allowed to be deposited into the account each year is currently £9,000, which is tax-free.

What are the alternatives to a Child Trust Fund?

The CTF scheme ended in 2011 and since then JISAs have replaced them. A JISA is set up in the child’s name and they cannot access the money until they turn 18. The money in a JISA is also tax-free and during the 2020/21 tax year they allow a maximum of £9,000 to be deposited into an individual account.

For more information about JISAs and to see the best JISA rates currently available visit our JISA chart.

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