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Children born on September 1, 2007, will be able to access their Child Trust Funds (CTFs) for the first time in September, when they reach 18 years old.
The first CTFs were opened for children born on or after September 1, 2002, so those reaching 18 this September are the fifth cohort to benefit from the UK Government’s savings scheme, which was designed to provide those on lower incomes with a head start to save money for their child’s future.
The first payments were made with vouchers into the funds from January 1, 2005, when the first CTFs were set up by providers.
What did the government pay into CTFs?
All children born between September 1,2002, and January 2, 2011, had a £250 voucher paid into a CTF on their behalf at birth. Those on very low incomes, who were claiming the full entitlement to Child Tax Credits at the time, got an additional £250, meaning £500 was paid in for those children from the lowest-earning families.
Some children also got another top-up voucher at age seven, but there were changes to the CTF scheme over time, and it means not everyone got the same amount of money paid in by the Government. Any child born between September 1, 2002, to July 31, 2010, got both the birth voucher of either £250 or £500, and got the voucher at age seven.
Children born on or after August 1, 2010,didn’t get the age seven payment, and all the voucher payments, including the birth vouchers, stopped completely when the scheme was scrapped on January 1,2011. Any child born after this date didn’t get any CTF vouchers at all.
Could the CTF be added to?
Yes, it has been – and still is – possible to add to the CTF, up to a total amount of £9,000 a year into the account until the child reaches 18. A year in CTF terms starts on the child’s birthday, and ends the day before the next birthday. But if the £9,000 annual allowance isn’t used up, it cannot be rolled over to another year, it disappears.
The CTF will grow free of tax until the child reaches 18 and at this point, the decision on what to do with the CTF rests with them. They can take control of their fund from age 16 if they want to, but cannot withdraw the funds for another two years. When they can take the money, the CTF can either be cashed in, or it becomes an adult Individual Savings Account (ISA) and will continue to be invested. The CTF itself will close.
What if I can't remember where the account was opened for my child?
If you know which company was managing the CTF for your child, then you should contact them directly when your child reaches 16 if they want to take over the running of the fund, and 18 when they are allowed to withdraw the money.
If you don’t know which company was running the CTF, then you can use the Gov.uk online search tool to find it. You will need your National Insurance number and the name and birth date of the child who’s name the fund is in. You may also need to provide the child’s National Insurance number, if you have it, to help find the fund. Children who were in care were also eligible for the CTF, so if this was the situation you or a friend were in, then you should check whether your fund is available to you, or tell your friend to check.
The average fund is typically around £2,000 when it is accessed, although those who had people add more each year would have a considerably larger fund. But either way, this money is sitting waiting for all those who reach 18 if they were born within the relevant years.
Contact us
If you want to find out more about whether you have a CTF or what to do with it when you access the CTF, then please get in touch with us and we will explain what you need to know.