Home Finance 430,000 children can claim up to £2,000 in free cash but parents...

430,000 children can claim up to £2,000 in free cash but parents don’t know – see how


Experts are urging these children, parents and even grandparents to check whether they have kept tabs on this free pot of cash and track it down if they haven’t. An estimated £1.7billion is sitting unclaimed in total. It can make a real difference to young people’s lives at a crucial time.

Child trust funds (CTFs), launched more than 20 years ago, were designed to give youngsters a financial head start in life.

Around 6.3 million tax-free CTFs accounts were set up for children born between September 1, 2002 and January 2, 2011.

However, an estimated 430,000 CTFs have been forgotten, HMRC figures show, with an average value of almost £2,000.

Children aged between 13 and 21 may have access to CTFs, which can be tracked down using a free HMRC tool, but many families do not realise this is an option.

There is another danger.

CTF owners are being targeted by unscrupulous operators who offer to track down the money for them, but charge hundreds of pounds for doing so.

There’s no need as everyone can track down a CTF totally free of charge via HMRC.

It’s no longer possible to open a new CTF today, as they were replaced by the more flexible Junior Isas in 2011. Yet existing ones are still out there.

CTFs have one major advantage over the Junior Isa.

Even if the child’s parents or guardian did not set up a CTF when they were born, HMRC would have opened an account on their behalf. It did this for around one in four eligible families.

Each child originally received a free government-funded voucher worth £250, increased to £500 for lower income families.

Some got a further £250 or £500 top-up at seven, although these free payments were scaled back in August 2010. Family and friends could make annual contributions on top, with the current maximum contribution now £9,000 a year, in line with the Junior Isa.

If the parents failed to invest the CTF in either cash or shares, the voucher government automatically invested the voucher in a stakeholder fund.

Up to 1.8 million children whose parents did not actively set up a CTF still have access to one, plus years of investment growth on those top-ups. 

The money belongs to the child who can take control of the account when they turn 16, although they cannot withdraw the money until age 18.

CTFs hit a significant milestone in September 2020, when the first beneficiaries reached adulthood, with around 800,000 maturing each year until January 2029.

Joanne Walker, technical officer at the Low Incomes Tax Reform Group (LITRG), said CTFs mature on the 18th birthday of the person they belong to. “At that point they can decide whether to take the money or transfer it into a tax-free adult Isa.”

Unfortunately, tens of thousands risk missing out, often those from low income families who may need the money most of all. “Some parents have simply forgotten they have an account, or don’t know where it is,” Walker said.

She warned that organisations are targeting young people via social media offering to trace and withdraw their money for a fee. “This could unnecessarily cost the young person hundreds of pounds, but they do not need to pay someone else to do this for them.”

She is urging young people and their parents or guardians to use the free HMRC tool, which can be found at Gov.uk/child-trust-funds.

Even if they do not know which bank, building society or investment company holds their CTF, families should be able to track down the account using the child’s date of birth and National Insurance number. “A few simple steps can help people find their fund, without paying an expensive fee,” Walker said.

Young people can use this tool to find their own CTF if aged 16 or over, as can parents and guardians of a child under 18.

The Share Foundation also offer a free tracing service at its website at Findctf.sharefound.org/, Walker said.

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