Glossary

This is a glossary of terms that have been used in the website. This glossary also contains useful definitions of words that are used when talking about finances and the Child Trust Fund Account (CTF).

Click one of the links below to go straight to words starting with that letter:

A | B | C | D | E | F | G | H | I | L | M | N | O | P | R | S | T | U, V, W |

A

account
This is the service provided by a bank or building society that holds money for you. A current account is an everyday account for money to be paid in or taken out - it helps you budget and manage your money and pay for things in a convenient and secure way. A deposit account is for savings.

additional payment
Government CTF payment paid to a child if living in a lower income household claiming Child Tax Credit (CTC) for the child at a given date (i.e. date Child Benefit first awarded or date eligible for age-related payment), subject to meeting full eligibility criteria.

AER
AER stands for annual equivalent rate. This shows what the interest rate would be if the interest on savings were paid and added to savings at the end of each year. Actually interest is often paid more often, such as four times a year. The AER is worked out in a standard way so you can compare interest rates directly with each other. The higher the AER, the better the return is on your savings.

after tax
Means what you are left with after tax has been paid. You must pay tax on most types of income (such as interest from savings, earnings from your job and pensions), but everyone can have some income tax-free. In 2008/09, the tax-free allowance for people under age 65 is £5,435 and for 2007/08 it was £5,225. Older people may get a higher allowance.

age related exclusion
Date Child Benefit entitlement ceases for a child due to age.

age related payment
Government CTF payment paid when child attains qualifying age, subject to meeting full eligibility criteria - Age related payment paid at age 7.

Age related additional payment - paid at age 7 plus element for lower income household claiming Child Tax Credit (CTC).

Age related special payment - paid to children in care at age 7.

alternative formats
Where requested, replies to customers can be issued in the following formats:

Audio
Welsh
Braille
Large print

The CTF website also has factsheets in a number of languages which are downloadable.

annually
Every year.

APR
Annual Percentage Rate. This tells you the cost of a loan, taking into account the interest you pay, any other charges and when the payments fall due. The cost is standardised as an annual percentage rate so you can easily compare the cost of one loan with another e.g. a loan with an APR of 15% is more expensive than one with an APR of 11%.

asset
Property or something of value that a person has. There are many types of assets-possessions such as cars, houses, or money in the bank, which are easy to value and sell (sometimes called ‘tangible assets’); and also things that it is more difficult to value such as education, a happy marriage or good health (sometimes called ‘intangible assets’). For every child who has a CTF Account, it will be a useful stock of assets for them when they reach 18. For example, a child could have money in shares, gilts and cash at the end of 18 years.

B

balance
Amount of money you have in your account at any particular time or which you owe on your credit or store card. It will be shown on your statement.

balance brought forward
The balance that was shown on your last statement.

bank
A company which offers services such as the safe-keeping of money, and the lending of money. It may also offer you such services as credit cards and investment advice.

A company that offers a range of financial services, such as current and deposit accounts. It may also offer you loans, mortgages and credit cards. Banks must be authorised to take your money.

bank account
A service offered by a bank. They will keep your money safe for you, and allow you to take some of it out when you need it. If a bank gives you such a service, it is called having an ‘account’ with the bank.

basic bank account
a service from a bank or building society which lets you pay in money, get cash out and pay bills. It doesn't let you spend more than you have in your account, so there's no risk of going overdrawn and running up overdraft charges.

bond
A bond is a certificate of debt issued in order to raise funds. If you buy a bond you are lending your money to somebody else, who promises to repay the money at a specified date. To make this worthwhile, some bonds pay interest while the money is borrowed from you.

borrowing
Getting money from someone else that you intend to pay back. You might borrow informally from friends and family or take out a formal loan with a written agreement.

budget
A plan of your spending
or
a plan of your future income and spending.

budget uprating
Annual increase in the rate of Child Benefit, as announced in the Chancellor’s Budget.

budgeting
Managing your finances so that your income is enough to pay for your expenditures.

building society
An organisation that borrows money from you (your savings) and lends it out to others (usually mortgages on property). They are mutual organisations, that is, they have no shareholders, and all profits after expenses go to those who put their savings in the building society.

An organisation that is owned by its members, who are some or all of the customers saving with or borrowing from the society. They often offer a range of financial services and are similar to banks. Building societies must be authorised to take your money.

C

calendar month
Term used by banks to describe the full month e.g. January, February etc.

capital
The amount of money you originally save or invest, before any interest, other return or loss is taken into account. It could also be an amount of money that you have borrowed.

capital gains tax
A tax you must pay on things you sell for more than you paid for them. An example would be a second home. Individuals pay capital gains tax at their highest marginal rate of taxation on their income (so if you are a top rate tax payer, you pay capital gains tax at 40%).

If you make money from selling an asset such as shares, at a higher price than you paid for it you will have to pay a tax called capital gains tax. Capital Gains Tax will not apply to income earned in a CTF account.

capital gains/capital growth
This is when the initial capital (money) you invested has grown and you can sell the asset for more than you paid for it. For instance, if you buy shares in a company whose share price goes up, you will be able to sell your shares for more than the price you bought them at, so the initial capital (money) you invested has grown.

charge cap (or management fee cap)
On all CTF accounts, providers charge a fee to manage the money in the fund. This is because there are administration and staff costs involved in opening and running an account. On a cash account, this is done by a reduction in the rate of interest you get. On an equity accounts, providers are obliged to tell you how much of the fund they are taking out to manage/administer the fund for you. This fee alters according to the type of fund you have, how much you have in it and who you hold it with. It is usually expressed as a percentage of the amount of money you have in the fund.

The provider who is running a child’s CTF Account will charge for the work it has to do. The amount they will charge will depend on the type of CTF account the child has. The work involved in running an account that includes shares or other securities will be more costly than running a normal cash account, and therefore the charges will be higher. But, the Government has set a fixed limit of 1.5% that providers can charge for the basic running of the stakeholder account (there may be other charges and expenses like stamp duty). This 1.5% is a charge cap, which is a set limit that somebody can charge you for performing a service.

charges
Fees and interest which you have to pay, for example, when you borrow money or buy on credit.

cheque
A written instruction to a bank. It can be used to pay you money. You can write out cheques to yourself to get money out of your account or to pay other people, if you have your own chequebook with your current account.

Child Benefit
A sum of money the government pays to virtually all parents whose children live with them to help support their child. For 2006/07 it is £17.45 a week for the first child and £11.70 for the second and third (or more). It is higher if you are a one-parent / one-child family.

Child Trust Fund (CTF)
The Child Trust Fund is a savings and investment account for children. The government will make a payment to start the account and then the child, parents, relatives and friends can contribute to it so that the account will build up and provide assets for the child when they reach 18.

Child Trust Fund (CTF) account
This is the actual account opened with the Provider upon receipt of a CTF voucher.

Child Trust Fund (CTF) Helpline
See Helpline.

Child Trust Fund (CTF) provider
A bank, building society, friendly societies or insurance company who is approved by HM Revenue & Customs to offer a CTF account.

Child Trust Fund (CTF) voucher
This is the printed piece of paper that entitles the bearer (a person with parental responsibility) to open up a CTF account on behalf of the child (name on the voucher).

The piece of paper that you give to your chosen provider, which then allows them to open a CTF account for the child.

Citizens Advice Bureau (CAB)
A local office where you can get help with a range of problems including your finances or debts. To find your local CAB look in Yellow Pages or ask at the Library.

cooling off period
A period of between 14 and 30 days after a provider has received a CTF voucher from you before the account is opened by the provider. This allows you to change your mind and open a different account without penalty.

consumer
When you buy something you are a consumer.

credit
This can mean several things. An account that is 'in credit' means that there is some money in it that is available to be spent. If you obtain goods or services 'on credit' it means that someone (for example, a bank or credit institution) has given you the money to make the purchase - they have credited you with the money. You must pay the money back. If you do not pay your credit card on time or have a history of not paying back other loans, this will be shown on your file held by a credit reference agency. When shops or banks check your creditworthiness and see this information has been listed, you may find it very difficult to get a loan.

credit card
A plastic card issued by a bank or building society that allows you to make purchases now and pay for them later. Credit will be made available to you to buy the goods. Every month the bank or building society will send you a statement of your account. You must pay back at least a minimum amount each month and interest will be charged if you do not pay off the full amount borrowed.

credit check
A check which is conducted by someone who wants to know about your financial status (such as a bank which is lending you money) to see if you have paid back loans (including credit card loans) on time in the past.

credit union
A non-profit making co-operative savings association that makes loans to its members at low interest and encourages saving.

Credit unions are co-operatives offering savings and loans. They have conditions of membership – such as living or working in a particular area. Credit unions are not about making a profit. They exist to help the members.

CTC
Child Tax Credit
One of the Tax Credits introduced by the Government to help lower income families.

CTF
See Child Trust Fund.

CTF Helpline
See Helpline.

CTFO
Child Trust Fund Office based at:
Waterview Park, Mandarin Way, Washington, NE38 8QG

current account
A bank or building society account that helps you to manage your money, pay bills, receive money and keep money secure.

D

dealing charges
Buying or selling shares on a stock exchange is not free. A dealing charge is the price a broker will charge you to dispose or purchase the shares for you. It is usually either a small percentage of the value of the sale or purchase or a fixed fee per transaction.

debit
Money which is taken out of an account is 'debited from' that account.

debit card
A plastic card that can be used instead of cash when making a purchase. The amount spent is taken automatically by computer from the account of the person who owns the card - it is debited from the account. Some cards (such as Switch and Delta) could let you spend money you have not got in your account - the balance is not always checked at the time of purchase. Other cards (such as Solo and Electron) only allow the purchase to go ahead if there is enough money in the account - it is always checked. Useful when paying in shops, shopping by phone or on the internet.

debt
If you are in debt you owe money to someone e.g. a bank.

dependants
People who are financially dependent on you for their livelihood. This is usually a child who lives with you, but it could be elderly relatives or someone you care for.

deposit account
A type of account with a Bank or Building Society, offered to encourage saving. You put money into a deposit account and the amount does not fall in value but will grow as interest is added.

Direct Debit
An arrangement where you instruct the bank to release money from your account to pay bills and other amounts automatically. The billing company requests the money from the bank directly. You are told in advance in writing how much will be taken and the date it will be taken out of your account.

diversifying
This is where you put your money into a range of different assets. If you invest in the stock market it may be in different companies, or it may be that you put some money into shares and some money into Gilts. The purpose of diversifying is to decrease the chance of losing a lot of money if one particular asset falls in value.

dividend
A dividend is a money payment paid to shareholders when the company they have invested money in makes a profit. The money value of a dividend is based on the number of shares held by the investor. If you owned 5 shares in a company and the dividend was 5p per share, you would receive 25p (not taking into account any tax).

DWP
Department for Work and Pensions
The Department for Work and Pensions was created in June 2001, to serve a new purpose: To promote opportunity and independence for all.

E

Enquiry Centre (EC)
Formerly known as Inland Revenue Enquiry Centres. Deal with face-to-face enquiries from HMRC customers.

EEA
European Economic Area.

equities
Another word for stocks and shares.

ethical account/investments
An ethical account/investment will not invest money in certain industries on moral or environmental grounds.

ethical fund
A collective investment opportunity where the administering body says it will or will not invest in certain industries on moral or environmental grounds. For example, the fund managers may say they will not invest in certain industries (such as armaments manufacture or oil retailing); or they may say that they will invest in certain types of businesses.

EU
European Union.

Euro
The name of the European single currency.

F

family unit
A ‘family’ group made up of multiple claimants with multiple children.

fee
A sum of money you pay, for example, to have a loan or credit arranged for you.

financial
To do with money.

financial adviser
An individual or firm that can assess your financial needs, recommend suitable products, and arrange for you to buy or invest in these products. Some advisers can also manage investments for you. Where advice concerns 'packaged products' (such as unit trusts, open-ended investment companies, investment trust savings schemes, investment-type life insurance and pensions), an adviser must normally be either:

- tied to a single product provider; or
- independent and able to recommend any product on the market.

An adviser must be authorised by the Financial Services Authority (FSA).

Financial Provider
A bank, building society, friendly societies or insurance company who is approved by HM Revenue & Customs to offer a CTF account.

friendly society
Friendly societies are mutual organisations, which means that the people who have investments in the society are members of the organisation. They provide a wide range of savings, assurance, insurance and healthcare products, often tax-free. They offer investment and protection to people in all walks of life.

fund
A fund is a general term for any investment that pools together money of many small individual investors and invests it on behalf of the investors.

G

gains
Also called ‘capital gains’. This is the profit you make when you sell something that is yours for more than you bought it for.

Gilts
Gilts are a type of Bond issued by The Bank of England when the Government needs to borrow money to pay for expenditure. If you invest in Gilts you lend money to the Government, who then pay you interest every year over a set term for lending the money. At the end of the Gilts life, the Government will pay you back the money you invested. Gilts are a safe investment because the Government backs them.

gross income
This is the amount of money you earn (either by working or by interest on your savings and investments) before any deductions such as for tax or national insurance contributions.

gross interest
Interest on savings before any tax is taken off.

H

Health and Social Services boards and trusts
Local Government bodies in Northern Ireland equivalent to local authorities in England, Scotland and Wales. They are responsible for providing a variety of local services. They are relevant for CTF as they are responsible for looked after children.

Helpline
CTF Helpline open between the hours of 08:00 and 20:00:-

0845 302 1470 (from within the UK),
00 44 1355 359002 (if calling from abroad), or
0845 302 1489 (for Welsh speakers between 08:30 to 17:00 Mon to Fri).
by Textphone 0845 366 7870

HM Revenue & Customs (HMRC)
Name of new Department which combines the former Inland Revenue and Customs & Excise departments.

household
A household is a family unit and defined via relationships. For example, if legally separated but living under the same roof and both are claiming for different children, then this would be considered as 2 households.

I

income
The amount of money you earn.

Your income is the money you have coming in. It includes things like wages, benefits (like income support or Child Benefit) and child maintenance payments.

income limit
The 'income limit' is the limit for a household to receive certain benefits. To receive full Child Tax Credit (CTC) your household income must currently be below the CTC limit £14,155, but this amount changes every year . If the amount your household earns is below £14,155 (for 2006/07) in total you will receive full Child Tax Credit and therefore will also be entitled to a higher initial Child Trust Fund payment from the Government.

For 2005/06 the CTC limit was £13,910.

Income tax settlement rules - see settlement rules

index-linked
Index-linking means that the value of the financial product or service (e.g. pension, savings certificate) is increased in line with an index (e.g. the Retail Price Index, or inflation).

With some types of contents insurance the insurer works out how much you need to increase your cover by each year.

individual savings account (ISA)
Put simply, the individual savings account, better known as an ISA, is an account the government has introduced in an attempt to persuade more people to save for the future. Your ISA must be run by an ISA manager approved by HM Revenue & Customs and you have to pay charges to your ISA manager, but any income from your investments – whether by way of interest, dividends or capital growth – is free of income tax charges.

inflation
After a period of time the same amount of cash buys less. This is because of inflation (the price of things you buy has ‘gone up’).

This is the situation in which prices and incomes keep rising. The result of inflation is that a given sum of money will buy fewer and fewer goods over time. For example, if you have £10 today and keep it for 5 years, you will be able to buy fewer goods in 5 years time compared to today.

instalments
Weekly or monthly repayments made to pay off goods bought on credit or to pay off a loan taken out to buy them.

insurance (buildings/content)
Insurance taken out to cover the house itself (buildings insurance) or the things in the house (contents insurance). If something happens to the building or contents you may get a pay-out from the insurer.

insurance company
An organisation that, in return for a fee (called a ‘premium’) agrees to pay you money if the thing you ‘insure’ with them is lost, damaged or destroyed. Examples are your car, your house and your life. Many of them also offer savings and investment products like banks and building societies.

insurer/insurance company
An organisation that, in return for a fee agrees to pay you money if the thing you insure with them is lost, damaged or destroyed. Many of them also offer savings and investments products like banks, building societies, and Friendly societies.

interest
The reward you get for lending your money to say, a bank or building society. Also, the cost you pay when you borrow money through a loan or credit agreement.

This is the reward you get for lending your money to say, a bank or a building society. If you put your money into a normal current account, the company you have the account with will pay you interest as an incentive to have money in the account. For example, if you had £100 in an account and the interest rate was 2%, at the end of the year you would have £102 (if no tax is taken off).

interest rate
is the percentage that is paid on savings (or loans). A CTF account that was offering 8% would give you a better return than one that was offering 5%. Similarly borrowing money at 22.5% is going to cost more than borrowing at 18%.

investment
financial products which typically involve some risk of losing your original money but give you the opportunity of better returns than you can get from savings. Rather than putting your money into a deposit account and getting the interest, you buy, say, stock market-based investments, such as bonds, shares, unit trusts and so on. A lot of people have shares without realising it as many financial products are actually based on investments, for example, endowment mortgages and pensions. Other products spread the risk of investing in the stock market by putting your money in a range of different shares, for example, unit trusts.

This is where you put some of your own money into a financial product, which involves some risk of losing your original money but gives you the opportunity of better returns that you can get from savings in a current or deposit account. The value of your investment will change over time. For instance, if you have shares, the amount of your investment will change as stock market prices go up and down.

L

lifestyling
Because the stock market does go up and down, money in stakeholder accounts will be gradually moved over from equities into safer assets after age 13. This is intended to protect young people from the impact of a stock market dip just before their account matures. This means your child will get the chance of a higher return on your money for the first 13 years, and then it will be moved to lower risk/return investments for the last few years.

This is also described as risk controls. The stock market can go up and down and to protect young people from losing money just before their account matures, money will be gradually moved over from shares into cash from age 13. This means you will have a chance to get a higher return on your money for the first 13 years. After 13 years the money will be gradually moved into cash or Gilts, which may offer a lower return than shares but are less risky, and will protect the child from a downturn in the stock market when they are close to 18.

Local Authority
Local Government body within England, Scotland and Wales responsible for providing a variety of local services. They are responsible for looked after children.

looked after child
A child in local authority care.

M

minimum payment
On a CTF account this would be the minimum amount you must pay into the account at any one time.

mix of investments
This is where you invest in more than one type of investment e.g. shares and Gilts, with the aim of decreasing the risk of your investment as a whole.

N

net
Indicates a sum of money from which certain amounts have already been taken away.

net interest
This is interest which has already had the tax taken off it.

Non-stakeholder account or Other types of CTF Accounts
This term applies to any other account apart from a stakeholder account. Non-stakeholder accounts may include investments in cash, Gilts, shares, and insurance products, as well as many other types of investment. The type of account will be different for each provider, and some providers will offer a range of Non-stakeholder accounts.

Cash CTF accounts will be similar to a current or deposit account that you may have already. The investments will be low risk and so as a result, you will get a lower return on the money that is in the fund. The interest rates on a cash account will also go up and down, but will not be negative.

O

Official Solicitor
Where a child being looked after by a local authority, and does not have a person with parental responsibility to manage their CTF account, the Official Solicitor in England, Wales and Northern Ireland or the Accountant of Court in Scotland will take on the management of that child’s CTF account. Official Solicitor’s office is a government body and is managed by the Department for Constitutional Affairs.

online account
A bank or building society account where transactions are conducted online (over the internet). Some providers may offer CTF accounts online.

P

parental responsibility
Only a person with parental responsibility for a child can manage that child’s CTF account. Parental responsibility is held by:

the child’s mother

the child’s father, provided

he was married to the mother at the child’s date of birth or subsequently, or
he has (re-)registered the child jointly with the mother, or
one of the parents (re-)registered the child on production of a statutory declaration made by the other parent

any person who has acquired parental responsibility by virtue of a court order (e.g. a Residence Order or a Special Guardianship Order), a formal parental responsibility agreement, by adopting or by being appointed guardian for the child.

Change of Gender
The Gender Recognition Act 2004 provides that if a person is regarded as being of the acquired gender, they will retain their original status as either father or mother of a child. The continuity of parental rights and responsibilities is thus ensured.

pay in
Putting money into your child’s CTF account.

payment definitions
Starting payment - Government funded payment to open a CTF account for all children born on or after 1 September 2002 [£250]. The child must be included in a current Child Benefit award (with the exception of children in Local Authority or foster care). The child must be resident in the United Kingdom or treated as being resident (with the exception of the children of Crown Servants posted abroad who are treated as being resident in the UK).

Additional payment - Government payment to a child if living in a lower income household claiming Child Tax Credit (CTC) for the child at a given date (i.e. date Child Benefit first awarded or date eligible for age-related payment), subject to meeting full eligibility criteria.

Age related payment - Government payment paid when child attains qualifying age, subject to meeting full eligibility criteria - Age related payment paid at age 7.

Age related additional payment – paid at age 7 plus element for lower income household claiming CTC.
Age related special payment – paid to looked after children at age 7.

Special payment - Government starting payment paid to certain looked after children.

per annum
Each year.

Post Office Card account
The Post Office Card account is a bank account with limited features, which is being developed by the Post Office. It will be an account into which only tax credits and benefits can be paid.

pooled investment accounts
Where money from a wide range of people is put into the same type of account and the money is invested by a professional manager, who will try to get the best return possible for the people who hold accounts.

profit and loss
In a business, you make a profit if you sell goods or services for more than your costs. You make a loss if the proceeds are less than your costs.

R

rate of interest
The cost of borrowing money. If a bank or building society lends you money, the rate of interest is the amount it will cost you to borrow that money. It is usually expressed as a percentage of the amount you want to borrow per year. So if you borrow £100 at 5% for one year, you will have to pay back £105.

real terms
This is a way of expressing the actual value of money in the future. Inflation means that £1 buys less next year than this year. For example £2000 buys £2000 worth of goods today, but would only buy ¾ of that amount of goods in 10 years. So in ‘real terms’ your £2,000 would be £1500 at that time.

registered contact
The person who is responsible for administering the CTF of a child under 16 (usually a parent and must be someone with parental responsibility). When a person opens a CTF account they then become known as the ‘registered contact’. When the child is aged 16 or more only they can be the registered contact.But they can ask HMRC to open an allocated account in advance of the CTF voucher expiring.

responsibilities
What you should do e.g. finish paying for goods taken out on credit.

return
The amount you get back on your capital. A general rule is that the higher the return the more risky the investment.

This is the amount you get back on the money you invest. A general rule is that the higher the return the more risky the investment. For instance, shares are a riskier investment than Gilts but can offer a higher return.

Revenue-allocated account
Standard stakeholder CTF account, the opening of which is initiated by HM Revenue & Customs in ‘looked after children’ cases / where vouchers is not used by expiry date / where parent is under 16.

risk
Another name for chance or uncertainty. Types of risk include capital risk (your savings or investment fall in value), interest rate risk (the interest rate you agree to may not be good value in the future) and inflation risk (price levels will rise so the buying power of your savings or investments will fall). Shares and share-based investments, such as unit trusts, are considered higher risk because the value of your investment can fall (capital risk) but growth of these investments tends to outstrip inflation and over the medium- to long-term usually beats the return from savings accounts.

The possibility that you might lose some or all of your investment. The more risk you take when you invest money, the higher the possible return. If an investment is more risky than average, then the return offered will usually be higher than average too. Very few investments are completely risk free.

S

savings
Any money you put aside for future use. This may be in a deposit account - or under your bed. 'Rainy day' savings are useful for emergencies and need to be easily accessible, while longer-term savings can be built up to give a 'nest egg'.

Any money you put aside for future use. The money put into a CTF Account will be ‘Savings’ for the child.

savings accounts
Savings are often kept in bank, building society or National Savings accounts. The amount you put in does not fall in value but may grow as interest is added.

savings products/ vehicles
This refers to all the different types of products that are available to help you save. For instance, deposit accounts, ISAs and other accounts.

securities
This refers to a financial asset. So it is another name for stocks and shares but can also apply to any approved or registered financial instrument, such as bonds.

settlement rules
Usually if a parent gives their child money to save, and the income from that money is more than £100 gross in any tax year, HMRC will tax the parent on that income as though it was their own. These rules do not aspply to CTF accounts. HMRC allows parents to contribute as much as they like without it affecting their own tax position. The only limitation is that each CTF account can only accept £1,200 of contributions in each year.

share (or ‘stock’, or ‘equities’)
Companies allow members of the public to buy a share of their company so that they can get money to invest in their business. So a share is simply a divided-up unit of the value of a company. If a company is worth £100 million, and there are 50 million shares in issue, then each share is worth £2 (usually shown as 200p in the money pages of the newspapers.) The value of the company will go up and down, according to how the company performs, and what the market thinks the share is worth. As the value of the company goes up and down, so does the price of your share in it. Some shares pay you an income (called dividends) regularly. With all shares, you accept a capital risk. This means, if the share price rises, you will make a profit when you sell, but if the share price falls, you will instead make a loss.

shares
Shares are investments that make you part owner of a company, along with all the other shareholders. Some shares pay you an income (called dividends) regularly. If the share price rises, you could make a profit when you sell, but if the share price falls, you could instead make a loss.

Shari’a account
An account acceptable under Islamic law in which the CTF voucher can be invested.

short term
Usually means a period of time no longer than, say, five years - and often a lot shorter.

Stakeholder
A type of CTF account designed to be good value for money by having low charges, flexible payments and risk control.

Stakeholder account
This is a type of account that will be offered to people who have a CTF voucher. The stakeholder account is designed to give good returns over 18 years by investing in the stock market, in shares of companies. Making use of life-styling controls the risks. People who have invested in the stock market have in the past tended to see a better return than if they invested in “cash” accounts, although this is not necessarily a guide to future performance.

Stamp Duty
Stamp duty land tax, to give it its full name, is a tax on transfers (sales) of shares (0.5%) or property (0%-4%, depending on where the property is and how much it costs).

standing order
A method of paying regular amounts automatically. You instruct your bank to pay the money for you to a particular person or company. It's your responsibility to change the payment if it needs to alter.

starting payment
Government funded payment of £250 made to open a CTF account for all children born on or after 1 September 2002. The child must be included in a current Child Benefit award (with the exception of children in Local Authority or foster care). The child must be resident in the United Kingdom or treated as being resident (with the exception of the children of Crown Servants posted abroad who are treated as being resident in the UK).

statement
A document from the bank or building society which shows your payments into the CTF account over the year. You should check it with your own records.

Stock Exchange
An organisation that operates a marketplace for the buying and selling of stocks and shares. Stock exchanges operate under strict rules and guidelines.

stock market (or ‘stock exchange’)
A stock market is where shares (also called ‘stocks’) are bought and sold (‘traded’).

stocks
The American term for shares in a company.

T

tax exempt
When something is tax exempt, you do not have to pay income tax on it. The income or capital gain from a CTF Account is tax-exempt for the child.

tax free
Something on which you are not required to pay tax of any sort. This might be an amount of money, a possession or a service.

tax free personal allowance
If you earn a wage, you do not have to pay tax on all of it. The first £5,035 you earn (in the tax year 2006-07) you pay no income tax on. You get a tax free personal allowance every year on your income. You get a higher tax free personal allowance if you are over 65. There is a tax free personal allowance for capital gains as well as for income tax.

TESPs
‘Tax exempt savings policies’. Basically, these are long term savings policies offered by friendly societies where you do not have to pay tax on interest.

U, V, W

voucher
Issued to Child Benefit claimant for a person with ‘parental responsibility’ to open a CTF account for the child with the government starting payment to the value shown on the voucher, with a Provider of their choice.

withdrawal
Taking money out of the account.