Tag: Child Trust Fund

HMRC: 420,000 young people urged to claim their cash

Almost 430,000 18-21 year olds with an unclaimed Child Trust Fund, worth an average of £2,000, are being urged by HM Revenue and Customs (HMRC) to claim their cash as part of UK Savings Week (18 to 24 September 2023). 

Child Trust Funds are long-term, tax-free savings accounts and were set up for every child born between 1 September 2002 and 2 January 2011, with the UK Government contributing an initial deposit of at least £250. Funds can be withdrawn once the account matures when the child turns 18. 

A recent student survey, conducted by UCAS, asked first and second year university students about Child Trust Funds and the results showed that they were most interested to know how much money was in their account (43%) and how to claim it (32%). The survey also revealed 60% of students got their information about Child Trust Funds from their parents. 

Young adults and parents can search on GOV.UK to find out where their Child Trust Fund account is held.

Angela MacDonald, HMRC’s Second Permanent Secretary and Deputy Chief Executive, said: “Many 18-21 year olds are starting out in first jobs or apprenticeships, starting university or moving into their first home and their Child Trust Fund is a pot of money with their name on. 

“I would encourage young people to use the online tool to track it down or, for parents of teenagers, to speak to them to ensure they’re aware of their Child Trust Fund. It could make a real difference to their future plans.” 

There are currently 5.3 million open Child Trust Fund accounts. Young people aged 16 or over can take control of their own Child Trust Fund, although the funds can only be withdrawn once they turn 18. More than 500,000 matured Child Trust Fund accounts have been claimed or transferred into an ISA since the oldest children on the scheme turned 18 in September 2020.  

Families can continue to pay in up to £9,000 a year tax-free into a Child Trust Fund until the account matures. The money stays in the account until the child withdraws or reinvests it into another account. 

The UCAS survey revealed that 74% of respondents were aware of Child Trust Funds.  

Further findings include:  

  • more men (75%) were aware of Child Trust Funds compared to 73% of women 
  • 78% of 19 year olds were aware of Child Trust funds compared to 71% of 20 to 21 years olds 
  • of the people who had not yet claimed their Child Trust Fund, 76% of respondents were likely to take steps to learn more about how to withdraw it. 

Sharon Davies, CEO of Young Enterprise, said: “We would encourage all young people to investigate if they have money which is unclaimed in a Child Trust Fund and to use it wisely.

“A disproportionate amount of the money is unclaimed by young people from disadvantaged backgrounds who are the very people who would benefit most from these funds. The investment could be placed into an adult ISA or put towards driving lessons, education or starting a business.  

“The money in a Child Trust Fund has the potential to be life changing and the lack of knowledge about them shows the importance of financial education and financial planning from a young age”. 

The UK Government is offering help for households. Check GOV.UK to find out what cost of living support you could be eligible for. 

Teenagers could be missing out on a stash of cash

Tens of thousands of teenagers in the UK who have not yet claimed their matured Child Trust Funds savings could have thousands of pounds waiting for them, reminds HM Revenue and Customs (HMRC).

Child Trust Funds are long-term savings accounts set up for every child born between 1 September 2002 and 2 January 2011. To encourage future saving and start the account, the government provided an initial deposit of at least £250.

The savings accounts mature when the child turns 18 years old. Eligible teenagers, who are aged 18 or over and have yet to access their Child Trust Fund account, could have savings waiting for them worth an average of £2,100.

If teenagers or their parents and guardians already know who their Child Trust Fund provider is, they can contact them directly. This might be a bank, building society or other savings provider.

Alternatively, they can visit GOV.UK and complete an online form to find out where their Child Trust Fund is held.

Many eligible teenagers who have yet to claim their savings might be starting university, apprenticeships or their first job. The lump-sum amount could offer a financial boost at a time when they need it most.

Angela MacDonald, HMRC’s Second Permanent Secretary and Deputy Chief Executive, said:“Teenagers could have a pot of money waiting for them worth thousands of pounds and not even realise it.

“We want to help you access your savings and the money you’re entitled to. To find out more search ‘Child Trust Fund’ on GOV.UK.”

An estimated 6.3 million Child Trust Fund accounts were set up throughout the duration of the scheme, containing about £9 billion. If a parent or guardian was not able to set up an account for their child, HMRC opened a savings account on the child’s behalf.

Teenagers aged 16 or over can take control of their own Child Trust Fund if they wish, although the funds can only be withdrawn once they turn 18 years old.

Where children have a Child Trust Fund, families can still pay in up to £9,000 a year tax-free. The account matures once the child turns 18 years old and no further money can be deposited. They can either withdraw the funds from the matured Child Trust Fund account or reinvest it into another savings account.

Until the child withdraws or transfers the money, it stays in an account that no-one else has access to.

The Child Trust Fund scheme closed in January 2011 and was replaced with Junior Individual Savings Accounts (ISA).

Thousands of teenagers missing out on Child Trust Fund cash

HM Revenue and Customs (HMRC) is today urging young people to check if they have a hidden pot of gold – in the shape of a Child Trust Fund (CTF).  

It is now one year since the first account holders started turning 18 and around 55,000 CTFs mature every month. This means their owners can withdraw funds or transfer savings into an adult ISA. Hundreds of thousands of accounts have been claimed so far, but many have not. 

CTFs were set up for all children born between 1 September 2002 and 2 January 2011 with a live Child Benefit claim. 

Parents or guardians set up these accounts with Child Trust Fund Providers – usually banks, building societies or investment managers – using vouchers provided by the government. If an account was not opened by the child’s parent, HMRC set one up on the child’s behalf. 

Between 2002 and early 2011, about six million CTFs were opened by parents or guardians, with a further million set up by HMRC. 

Economic Secretary to the Treasury, John Glen, said: “It’s fantastic that so many young people have been able to access the money saved for them in Child Trust Funds but we want to make sure that nobody misses out on the chance to invest in their future. 

“If you’re unsure if you have an account or where it may be, it’s easy to get help from HMRC to track down your provider online.” 

Some young people may not know they have a CTF – or some parents or guardians may have forgotten who they set the account up with. To help them find their accounts, HMRC created a simple online tool.  

Any young people unsure about whether or not they have a CTF should first ask a parent or guardian if they remember setting one up. Once they know who their provider is, they should contact them directly – and either request to withdraw the money or transfer the funds into an adult ISA or other savings account. 

For those who cannot access the tool, HMRC will provide alternative, non-digital routes to finding a CTF provider upon request. HMRC will send details of the provider by post within three weeks of receiving their request.  

The accounts were set up to encourage positive financial habits and a saving culture among the young account holders. HMRC is working with the Money and Pension Service (MaPS) and the CTF providers to continue to provide financial education to the beneficiariescation to the beneficiaries.   

At 16 years, a child can choose to operate their CTF account or have their parent or guardian continue to look after it, but they cannot withdraw the funds. At 18 years of age, the CTF account matures and the child is able to withdraw money from the fund or move it to a different savings account.