Child Trust Funds were a government initiative for children born between 1st September 2002 and 2nd January 2011. Children were given a starting voucher of up £250 (depending on starting date) towards savings. Parents of eligible children were able to choose where to invest the voucher, or the government would do this automatically for them.
This means that many parents don’t know where to find who their Child’s Trust Fund provider is, or how to make changes to the savings.
Given that even the very oldest of the children eligible for child trust funds (CTF) are still under 18, this means there is still saving potential while they are still children. For children still at primary school, the saving potential is enormous. So how do you find your Child Trust Fund provider and how can you manage your child’s savings?
Tracking down the Child Trust Fund provider
If you aren’t sure where your child’s original voucher was invested, then your first port of call should be the government Child Trust Fund webpage. From this page, you will be able to log-in or set up, your Government Gateway account where you can get in touch to see where the money was invested and how to contact them. This also applies to children you have adopted or have taken over parental responsibility for.
CTFs no longer exist in their original form for new entrants. If your child wasn’t born in the eligible period, and you want to open tax-efficient savings account for them, you can use their replacement – a Junior ISA. For those who did qualify for a CTF, you can continue to add money to their fund up to a maximum of £4,260 per year. You can also choose to transfer their money into a Junior ISA instead.
Make the most of tax-free savings
It’s worth making the most of both CTFs or Junior ISAs due to their tax-free savings potential. Children cannot access the funds until they are 18, so they are a secure means of saving for them for when they embark on adult life.
It’s not possible, due to the tax-efficient nature and therefore the savings limits, for a child to have both a CTF and a Junior ISA. However, it is possible (since April 2015) for you to move their savings from a CTF to a Junior ISA if you wish to. We make this easy for you, and you can arrange to transfer your child’s CTF to a Shepherd Friendly Junior ISA.
You can make contributions to a Junior ISA up to the child’s 18th birthday, and no capital gains tax is payable on the gains they make. Additionally, the amount you can pay in is up to £4,260 in this tax year.
The benefit of saving little and often
CTFs and Junior ISAs are designed for putting away a little each month with the view to it gradually building a bigger pot over time. Small contributions, especially when your child is younger, aim to grow into much more significant savings through tax relief and returns as they grow. With Junior ISAs such as ours, with monthly payment amounts from just £10 make it easy to save regularly in a way that will give your child a financial boost as they embark on adult life. If you prefer to pay in irregular amounts, via cash lump sums, as and when you can, then you can do this too.
What can my child do with their CTF?
When your child is 18, the funds in their CTF or Junior ISA become accessible to them. For young adults starting out, having a nest egg can help with university costs or even go towards the deposit on their first home. There aren’t any restrictions on what the money can be used for once your child reaches adulthood.