Children looking at piggy bank

Child trust funds

Children looking at piggy bankChild trust fund is a savings and investment account for children. Children born on or after 1 September 2002 received a £250 voucher to start their account, but in May 2010, the new Government announced it was to scrap the £250 payment. They have also cancelled the secondary payment made to children at a later date. The fund will be phased out between August 2010 and January 2011.

Read the Government announcement about the changes.

Child Trust Fund companies continue to operate the funds, because parents are still free to use them for savings on behalf of their children.

Key facts about the Child Trust Fund

  • a long-term savings and investment account where your child (and no-one else) can withdraw the money when they turn 18
  • neither you nor your child will pay tax on income and gains in the account
  • £250 voucher to start each child’s account
  • children in families receiving Child Tax Credit (CTC) may be entitled to an additional payment of £250. Entitlement is normally based on the date child benefit was first paid for the child. Where child benefit was first paid for your child on, or after 6 April 2008 you must have household income under the CTC threshold (£16,040 for 2009/10) and claim CTC no later than the date your CTF voucher expires. Make sure you don’t leave it too late! Where child benefit was first paid before 6 April 2008, a CTC award must be in place for the time at which child benefit was awarded.
  • a maximum of £1,200 each year can be saved in the account by parents, family or friends
  • money cannot be taken out of the Child Trust Fund (CTF) once it has been put in – once your child is 18 they will be able to decide how to use the money
  • children can start to make decisions about how the money is managed when they are 16
  • the Government will make a further contribution when your child is seven – all eligible children will receive a further payment of £250 into their CTF account at age 7, with children in lower income families receiving an additional £250. These payments will be paid around the child’s 7th birthday direct into their account
  • not just one type of CTF account – you choose the type of account you want for your child
  • at any time you can move the account to a different provider or change the type of account
  • it will not affect any benefits or Tax Credits you receive.

Child trust fund and child benefit

The first step to opening a child trust fund (CTF) account is to make a claim for child benefit. Once you start receiving child benefit for your child, an information pack and then a voucher will be automatically issued. This should happen quite quickly and if you don’t get a voucher within a month you should call the CTF Helpline.

Child benefit is for people who are bringing up children and is usually paid for the period from the Monday following the child’s date of birth. It is paid for each child and is not affected by income or savings.

Above information taken from

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