What is the Child Trust Fund (CTF)?
The Government has introduced the Child Trust Fund to help you save for your child's future.
The CTF is a type of long-term savings and investment account for children born on or after 1st September 2002, who qualify for Child Benefit.
The Government will issue a £250 voucher to you, as long as you qualify, to kick-start your child's CTF account.
There are three main types of CTF account:
- A stakeholder account
- A shares account (non-stakeholder)
- A savings account
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Can I open a CTF account by phone, post or online?
How you open the account will depend on the CTF provider. But you will need to send them the voucher, as without it the account cannot be opened.
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Do I need a bank account?
No but some providers may ask for ID when you fill in the application form. Please check with the CTF provider you choose.
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My child qualifies for a CTF account but I haven't received a voucher. What can I do?
You should have received a voucher automatically after you started receiving Child Benefit. To get a replacement voucher sent out simply call our helpline on 0845 302 1470.
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I've lost my voucher, can I get a replacement?
Yes, all you need to do is contact the Child Trust Fund helpline on 0845 302 1470 and another one will be issued.
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Can I open a CTF account for my other children who were born before September 2002?
CTF accounts can only be opened for children born on or after 1st September 2002. But there are plenty of other savings and investment accounts for children. More information can be found on the Child Trust Fund website.
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How much can I put in each year?
The maximum that can be put into the account each year is £1,200. The Government payments do not count towards this limit.
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Who can contribute?
Anyone can contribute. Grandparents, other family members, friends and in time your child can put money into the account.
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Do I have to pay tax on the money in a CTF account?
No, neither you nor your child will pay tax on any interest or gains made on the money in a CTF account.
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Can I take out the money I have put in if I need it?
No, the money in the CTF account belongs to your child. Only they can withdraw money from the account. But it cannot be taken out until they turn 18. At 18 they can decide how best to use their money.
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What happens if I don't use the CTF voucher before it expires?
The sooner you open an account, the sooner the money will begin to grow. Once a voucher has been issued you have twelve months to open a CTF account for your child. If you don't do this, HM Revenue & Customs (HMRC) will open a stakeholder account in your child's name with a Child Trust Fund provider.
HMRC will send you the details of the account they have opened. It's then up to you to manage it. You can change this account or provider if you wish, but it would be best for your child if you choose the account yourself before the voucher expires.
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Will the money in my child's CTF affect family benefits?
No, if you are eligible for family benefits or Tax Credits you will continue to receive them and money in a CTF account will not affect your benefits.
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I am a parent under 16 — can I open a CTF account?
No, because by law under 16's cannot manage CTF accounts. You should contact the CTF helpline on 0845 302 1470 and they will open an account on your behalf. When you are 16 you will be able to manage this account for your child. Then, if you decide to, you can change it to a different type of CTF account or to a different provider.
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How will the Government know where to make CTF payments?
When you use the CTF voucher to open a CTF account the provider will tell HM Revenue & Customs and claim the Government starting payment. When further payments are due (for instance when your child turns seven) HM Revenue & Customs will ask the provider to make that payment directly into your child's CTF account. Providers will let us know about any account changes.
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Will there be any other Government payments?
If you have a finalised award of Child Tax Credit (CTC) for the date you first received Child Benefit for your child, and the household income is at or below £13,910 (the CTC limit in 2005-6) your child will get an additional £250. This will be paid directly into your child’s account.
All children will receive a further payment of £250 when they turn 7, with children from lower income families again receiving an extra £250. The government is also considering a further payment at secondary school age.
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What happens if I don't claim Child Benefit?
You will only get a CTF voucher if Child Benefit is awarded for your child. In order to ensure you receive any letters about the CTF, make sure your Child Benefit office has an up-to-date address for you. Child Benefit is not payable if a local authority (or Health and Social Services Trust in Northern Ireland) is looking after a child but there are special arrangements to make sure these children do not miss out.
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How is the CTF different from the savings I already have for my child?
There are several key differences:
- the Government makes a payment for each child, with more for children in lower income families;
- the Government is considering making an additional payment when your child turns seven and are also considering a further payment at secondary school age;
- the CTF is a long-term savings and investment account and your child will not be able to take out the money until they are 18;
- neither you nor your child is taxed on the money earned in the account;
- a maximum of £1,200 can be saved each year in the account by parents, family and friends;
- children will learn about the CTF in school.
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My voucher was issued by the Inland Revenue but now I'm dealing with HM Revenue & Customs. Who are they?
In April 2005 the Government integrated two of its departments, the Inland Revenue and HM Customs & Excise, to form a new department, HM Revenue & Customs (HMRC). You are therefore dealing with the same people as before, we just have a new name.
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Where can I find out more information about the Child Trust Fund?
If you are after more general information, you can visit the Child Trust Fund website.
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