Child Trust Fund: Is your child owed hundreds?
We explore what Child Trust Funds are, who would’ve qualified and options once you’ve found one.
Last Updated: 30 August 2023
Almost 1 million young adults have money sitting untouched in a Child Trust Fund (CTF). What’s more, the average balance of a CTF is an estimated £2,100. This nest egg could give young people an important head-start with their savings and help them begin adult life on the right foot. So, it’s worth checking to see if your child has one.
This article isn’t personal advice. If you aren’t sure if an investment or course of action is right for you, please speak to a financial adviser.
Child Trust Funds: the basics
Children born between 1 September 2002 and 2 January 2011 will have qualified for a CTF. When the child turns 18, the CTF will mature, and they’ll get access to the funds.
When it was set up, each child received a voucher worth £250 (or £500 for those from lower income families) which was either invested or held as cash. Children born after 31 July 2010 will have received a payment between £50 and £500. They may have also received another top up when they were seven, and friends and family were able to contribute too. Although the government reduced the amount they put in as the scheme went on, all eligible children will have something in their CTF. So, if you know a child born then, it’s worth a quick check. It could mean the difference of that child getting hundreds, or even thousands of pounds.
Please remember that CTF, ISA and tax rules can change, and the benefits will depend on your individual circumstances.
Finding a Child Trust Fund
The Public Accounts Committee says there could be more than £1.7 billion sitting unclaimed in matured CTFs. This staggering amount is likely to rise for a few years too. As the first wave of CTFs only began maturing in 2020, we’ll continue seeing accounts maturing for some time.
Don’t worry if you’ve lost track of your child’s CTF. You can check where it is held using HMRC’s tracing service.
I’ve found my child’s CTF – now what?
If your child is under 18, you could think about transferring their CTF to a Junior ISA.
It could be worth transferring, as although there are similarities, such as the £9,000 annual contribution limit, the tax-efficiency of the account and that the money is locked away until age 18, the Junior ISA has a number of advantages. They typically offer more competitive charges and a greater investment choice, meaning more potential for greater returns.
There are two types of Junior ISA: a Stocks and Shares Junior ISA and a Cash Junior ISA. Your child can have one of each type of account, as long as contributions don’t exceed the annual limit across both accounts. When deciding whether to open an account, you should think about when your child will want access to the money. If it’s within the next 5 years, consider cash. Whereas if they won’t need it in the next 5 years, you could consider investing using a Stocks and Shares Junior ISA. Remember that all investments can fall as well as rise in value so your child could get back less than invested.
Find out more about whether to save or invest
Transferring to a Junior ISA
If you’ve decided a Junior ISA is right for your circumstances, you’ll have to transfer your child’s CTF as they can’t have both accounts at the same time. It's worth noting that only the ‘registered contact’ can transfer a CTF.
At HL, we have a Stocks and Shares Junior ISA which gives you a wide choice of investments. What’s more, at HL, kids go free. Whether you’re holding funds, shares, ETFs or bonds, there’s no charge to deal and hold these investments in our Junior ISA. Depending on where you invest, other charges could still apply. There's also no charge to transfer to us, though we recommend checking with your current provider to make sure your child doesn’t lose any valuable benefits or incur excessive exit fees.
More information about the HL Junior ISA
If you’re looking to gift your child the maximum possible into a tax-efficient account, you may even be able to contribute to both a CTF and a Junior ISA in one tax year. For example, you could contribute £9,000 to a CTF, transfer this to a Junior ISA, then gift up to £9,000 into the Junior ISA. This means that your child could have up to £18,000 added to their tax-efficient account in one year.
Unclaimed Child Trust Funds
If your child had a CTF but has already turned 18, their account would have matured, and the money will be theirs. If they aren’t sure what to do with their savings pot, they could think about opening a Stocks and Shares ISA. This is the adult version of our Junior ISA and is also an investment account which allows them to invest in a tax-efficient environment.
Find out more about the HL Stocks and Shares ISA, including charges
If you’d like to transfer your matured CTF to the HL Stocks and Shares ISA, you can do so by filling out our application form.
