| Child Trust Fund |
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| Find out about the government's new Child Trust Fund |
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| The CTF is a new long-term savings and investment account for children. The Government will make payments to children through this account to help build up a useful stock of assets for when they reach the age of 18. The CTF accounts will help to strengthen the savings habit of future generations, spread the benefits of assets ownership to all, educate people in the need for savings and give young people a basic understanding of financial products. |
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| The Child Trust Fund is a new savings and investment account for children. Children born on or after 1st September 2002 are eligible if child benefit has been awarded for them and they live in the UK. There is no need for parents to claim Child Trust Fund (CTF) – Once a child benefit award has been made and eligibility for the CTF accepted, a voucher worth £250 for the initial Government payment will be sent to the child benefit claimant, who will usually be the parent. A person with parental responsibility for the child can then use the voucher to open a CTF account for that child. An additional £250 will be paid into the CTF accounts of children in families eligible for full Child Tax Credit (CTC) with household income at or below the CTC income threshold (currently £13,480). Parents will receive an information pack giving them details of what they need to do, and information will be available on a dedicated website and from a CTF helpline. There will be a range of CTF accounts to suit everyone’s needs. All providers will be making available a stakeholder CTF account. Charges for this account are kept low and the account is designed to give good returns over 18 years by investing in the stock market. The risks are controlled by making sure that there is a mix of investments and that they are less risky as the child nears the age of 18. If an account is not opened before the voucher expires (usually 12 months from issue) the Inland Revenue will open a stakeholder CTF account for that child. Special arrangements will be made for looked after children (as child benefit cannot be claimed for these children) to ensure that they do not miss out on a CTF account. Parents, family and friends will be able to contribute up to a total of £1,200 a year to a CTF account. Income arising on the money and investments in a CTF account is exempt from tax. The money in a child’s CTF account can only be taken out by the child on reaching the age of 18. There is no access to the money until then. The account and the money in it belongs to the child, although it is managed by a person with parental responsibility until the child is 16. When children reach 16 they will manage their own CTF accounts. When a child reaches the age of 18 there will be no restriction on how they use the money in their CTF account. Financial education is a key part of the CTF and all children will receive financial education to help them manage their money with future needs in mind. Information will be available for parents, teachers and children over the lifetime of a child’s CTF account. The CTF account and the income and gains from that account will not affect family benefit and tax credits during the time the CTF account is open. |
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| Child Trust Fund Invest your Child Trust Fund voucher tax-free |
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| Investing Money Free investing money resources |
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