Further information about the Child Trust Fund

Below is a list of questions that are answered in this section.

Questions

How will I receive a Child Trust Fund (CTF) voucher?

What am I responsible for if I am the ‘registered contact’?

How is the CTF different to the savings I already have for my child?

What are the tax benefits of a CTF account?

What happens if I have twins or triplets?

I am from the EU and work in the UK. Will my child be eligible for the CTF?

What happens if my child lives abroad, but I work in the UK?

What if my child goes to school abroad but lives in the UK during the holidays?

What happens if I am British but I’m living/working abroad?

Will HM Revenue & Customs keep a file on me/my child?

Answers

Q. How will I receive a CTF voucher?
A. When you start receiving Child Benefit for your child, and provided your child is living in the UK, you will automatically be sent an information pack and then a voucher for £250 in the post. You do not need to fill in any additional forms. Children in families receiving Child Tax Credit (CTC) with a household income not greater than the CTC threshold of £15,575 for 2008/09 will receive an extra payment of £250.

For previous years' thresholds use this link

Q. What am I responsible for if I am the ‘registered contact’?
A. If you are the registered contact you will become the main point of contact for the account. You will look after the account until your child reaches the age of 16, at which point they will take over responsibility. Until then you will need to keep your contact details up to date and will be able to:

change the type of account opened
change provider
tell the provider how to invest the funds and run the account.

Your child will be sent a statement every year to show how much is in the account and this will go to your address. As your child grows up you might want to talk about the statement with them.

Q. How is the CTF different to the savings I already have for my child?
A. There are several key differences:

the Government makes a payment for each child, with more for children in lower income families
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
the CTF offers you, your family and friends the chance to save up to £1,200 a year in addition to the contribution by the Government. Even small payments will make a difference in the long run allowing the account to grow to a sizeable asset over 18 years and
neither you nor your child will pay tax on the income and gains in the account.

Q. What are the tax benefits of a CTF account?
A. The benefits are:

Your child does not have to pay tax on any of the income from their CTF savings and investments. This includes dividends, interest and bonuses
The normal rules where parents pay tax on interest of more than £100 on capital they have given to the child (the 'settlement rules') do not apply
Your child does not have to pay tax on capital gains arising on their CTF investments. (But note that this means that losses on CTF investments cannot be allowed for Capital Gains Tax purposes against capital gains arising outside the CTF)
If the CTF provider is an insurer they do not have to pay tax on income and capital gains on investments used to back your child's CTF life insurance policies. And your child does not have to pay any tax when the policy pays out, and
The income and capital gains from your child's CTF account do not have to be declared in a tax return. You don't have to tell the tax office that your child has a CTF.

Q. What happens if I have twins or triplets?
A. Each of your eligible children will get a CTF account and you will receive a separate voucher for each child.

Q. I am from the EU and work in the UK. Will my child be eligible for the CTF?
A. If you are from the EU, are entitled to claim Child Benefit, and your child is living in the UK, your child will be eligible for a CTF account.

Q. What happens if my child lives abroad, but I work in the UK?
A. The purpose of the CTF is to encourage savings in the UK population, so CTF is not for children living abroad. A child becomes eligible in the usual way on moving to live in the UK if Child Benefit is awarded.

Q. What if my child goes to school abroad but lives in the UK during the holidays?
A. It is likely that your child’s CTF account will already have been set up before your child goes to school.

If you normally live in the UK with your child, you continue to be eligible for Child Benefit if the child goes abroad temporarily for up to 12 weeks, as long as you are supporting your child. If your child is temporarily abroad for more than 12 weeks, you may still get Child Benefit if they are at school in an EEA country or Switzerland. This means your child is still eligible for CTF payments.

Q. What happens if I am British but I’m living/working abroad?
A. Generally you will not be able to claim Child Benefit if you are living abroad, so your child will not get a CTF voucher. If you come back, start receiving Child Benefit and your child is living in the UK then you will get a CTF voucher for him or her. Children of Crown Servants (those working on behalf of the British Government) and Armed Forces posted overseas are an exception as Child Benefit can be received while parents are abroad. These children will get a CTF account.

Use this link for further information on saving if you are in the Armed Forces

Q. Will HM Revenue & Customs keep a file on me/my child?
A. Yes. We keep information to enable us to contact you. You are able to apply to HM Revenue & Customs under the Data Protection Act to see that information.

More information about applying to see your information on the HM Revenue & Customs website