The Child Trust Fund (CTF) is a long-term tax-free savings/investment account for children born between 1 September 2002 and 2 January 2011. All children within this age range have a CTF, which includes an initial payment of £250 or £500 from The Government.
The money in the CTF account belongs to the child but can't be taken out until they are 18. Family and friends can add money to the account up to a limit of £9,000 a year, a limit which runs between birthdays. There is no tax to pay on any income or gains within the account.
An adult in a position of parental responsibility called the Registered Contact acts on behalf of the Child to make sure that the account is properly invested and operated: the account itself is held with a CTF Provider.
Although the Government is no longer making payments to this account, CTFs already in existence continue to operate and be open to voluntary contributions.
There is also a search process provided by The Share Foundation and designed particularly for 16/17 year-olds, it just requires a few details including a national insurance number, and you can find out if you have an account in your name:
18-year-old Donna Keates has recently been able to access her money. She found out she had a Child Trust Fund aged 16, but had to wait until she was an adult before she could spend the money. She plans on using the £1,900 in her account on driving lessons.
She said: “So when I turned 16, I got a letter in the post saying I could manage the account and take control of it, but I couldn't take the money out until now. It's like a good starter when you’re young obviously. I know you could do whatever you want with it.”
There are around six million Child Trust Fund accounts in total. Since September last year, the first in the age cohorts to have one have begun to turn 18. However, the Share Foundation is concerned that only around half have taken control of their accounts.
Gavin Oldham, The Share Foundation said: “With a total of £9.5 billion pounds invested in accounts, that's a lot of money, which is actually sitting there waiting for young people to come and claim it. At the age of 16 you're given a national insurance number. And that's a key thing for actually finding the CTF. But once you have one it is a straightforward process online.”