Child Trust Fund

The Child Trust Fund is a government initiative to encourage people to save for their child’s future, and ensure that adults of the future will have some money when they begin their adult life. When your child is born you will be entitled to a government voucher to the value of £250 to start your child’s Child Trust Fund. When your child is seven years old they will be entitled to another £250 voucher from the government. This is a long-term savings and investment account, and any income and gains related to this account will be tax-free. Families eligible for Child Tax Credit, see Child Tax Credit, who are on a low income will also be entitled to an extra Child Trust Fund payment from the government. You can choose the nature of this account and the account provider, and the account will not have any effect on other benefits or Tax Credits, see article Tax Credits, that you are entitled to receive.

Up to £1,200 can be saved in the Child Trust Fund each year, and contributions can be made by the child, parents, grandparents or friends. When money has been put into the Child Trust Fund it can not be taken out again. When the child reaches eighteen years of age they are allowed to withdraw the money in the Child Trust Fund or choose how to invest it further. No one but the child to whom the Child Trust Fund belongs is allowed to withdraw the money. To qualify for the Child Trust Fund your child must:

• Have been born on or after 1st September 2002
• Live in the UK
• Not be subject to immigration control
• Have been living in the UK on or after 6th April 2005 if they were born between the 1st September 2002 and the 5th April 2005
• In addition, you must be claiming Child Benefit for your child.

When you begin claiming Child Benefit for your child, you should automatically be sent an information pack with details of how you can set up the Child Trust Fund and the £250 start-up voucher. You will have to read the guidelines and decide on a suitable account and an account provider, then contact your chosen provider to set up the Child Trust Fund. You will be the provider’s contact until the child in question reaches their sixteenth birthday, when they will be allowed to manage their own account.