Child Trust Fund news

All children born after September 2002 are eligible for a Child Trust Fund (CTF) account if Child Benefit has been awarded for them and they are living in the UK. The government makes an initial contribution of £250 (£500 for children in lower income families) in the form of a voucher that is used to open the account.

The Chancellor announced in his 2006 Budget that a further award of £250 will be made when qualifying children reach the age of seven (£500 for children from lower income families).

Somewhat surprisingly it seems that a substantial number of parents are waiting until the last few days before expiry of their CTF voucher before attempting to open a CTF account for their child. Such late applications cause particular problems for account providers where the application is made by internet or telephone at the last minute, meaning that the CTF voucher is received by the account provider after the expiry date.

In response, the government has amended the CTF regulations to allow a seven day period after the expiry date for parents to get the voucher to their chosen provider.

All is not lost!

If parents do not successfully use the CTF voucher before it expires all is not lost! Once a voucher has been issued parents have twelve months to open a CTF account. If they do not, HMRC will open a stakeholder account in their child’s name. This will be with one of the CTF providers and HMRC will send parents the details of the account that has been opened. It is then up to the parent to manage the account and they do have the option to change the account or provider if they wish.