September 2018 will see thousands of children across the UK turning 16. These children, born from 1st September 2002, can then manage their own Child Trust Fund. Some parents might have forgotten about this savings account since its introduction in 2005. While the scheme ended on 1st January 2011, any children born between these dates should have some amount of money waiting for them in their own Child Trust Fund.
What is a Child Trust Fund?
The Labour government set up these Trust Funds for all children born after 1st September 2002. Even if a parent never opened one for their child, the government would have done it for them. The government would begin the fund with a £250 voucher, topping it up with another one when the child turned 7 years old. This doubled to £500 for children from low-income families. Even if nobody invested more money into the fund, your child could have at least £500-£1000 in their Trust Fund, plus interest. The government reduced the vouchers to £50 or £100 in 2010, before scrapping the scheme in 2011. After this, children could open a Junior ISA, with no vouchers from the government. Children can begin to manage their Trust Fund from the age of 16, though they are not able to withdraw any of the money from a Child Trust Fund until they are 18.
How much is in a Child Trust Fund?
Today, the average Child Trust Fund will contain on average £2,175. The parents, family members, friends, and even the child could invest money into the fund as the child grew up. For families who did this, there will be more for of a nest egg for the child when they become an adult. But, on the other hand, some parents may not have known about the Child Trust Fund or forgotten about it over the years. Around a million Child Trust Funds have been abandoned, but they will still contain the money put in by the government. This means that if your child was born during the eligible window, they should have a minimum of £500 in a CTF. Even those born after August 2010 should have at least £100 waiting for them when they turn 18, which is still something. Some families might have already switched the Child Trust Fund into a tax-free Junior ISA instead.
How can my child access their CTF?
If Child Trust Funds are news to you, but you think that your child was eligible for one, then you should contact HMRC to locate the Child Trust Fund and find out how much is in it. Click here to fill in and submit the form to ask HMRC where to find your child’s Trust Fund account. You will need to log in to your Government Gateway account. If you don’t have one or don’t remember your details, then call the HMRC helpline. Your child can then transfer their CTF to a Junior ISA and benefit from the higher interest rates. If your child has a CTF but will not be turning 16 for several more years, now is a good time to track down their CTF and start investing in it if you haven’t already. No matter how little you put in, the savings will still accrue interest over the years, providing a little more to help your child when they grow up and can withdraw it.