If you have, or know of, a child that was born between 1st September 2002 and 2nd January 2011, then they would have been entitled to a Child Trust Fund; the government’s tax-free savings account scheme that was set up for children born within this period.
The scheme was initiated as a way of encouraging parents to save for their child’s future. When a child’s account was opened, the government would have given a free cash voucher up to £250, or £500 for low-income families, which parents could continue to add to until the child’s 18th birthday. Note that the Child Trust Fund scheme closed in January 2011 and was replaced with Junior Individual Savings Accounts (JISA).
Under the Child Trust Fund, a parent or guardian is able to add up to £9,000 a year to their child’s account until they turn 18. This money belongs to the child and they can only take it out when they turn 18. They can, however, take control of the account when they’re 16. Even if the parent/guardian wasn’t able to contribute additional funds to the account, the free cash voucher would mean that each child is guaranteed to have some money saved – plus interest.
Alarmingly, though, out of the 6.3 million Child Trust Funds that were opened, it’s estimated that up to a million could be ‘lost’, as account holders are unaware that they exist.
In this week’s Tax Tuesday, we take a look at the scheme and how you can locate the savings.
Finding a Child Trust Fund
Given that the Child Trust Fund was taken out in the name and address of the parents at the time of the child’s birth, it’s unsurprising that so many are lost or forgotten over the span of 18 years. If a parent or guardian was not able to set up an account for their child, the government opened a savings account on the child’s behalf making them even harder to track down.
If you know who the account is with, then you can contact the provider directly. If you do not know the Child Trust Fund provider, HMRC will be able to help you track it down. You can either do this online or request the details by post.
HMRC’s Find a Child Trust Fund tool allows you to input the child’s details so that they can inform you which provider holds the account. If the child is older than 16, they will need to do this themselves. To do this, click “use the online form to ask HMRC where a Child Trust Fund is”. You will need to have:
- your National Insurance number
- Government Gateway user ID and password (if you don’t have this, you can click ‘Create sign in details” to set an account up.
Once HMRC responds, you will be able to contact the Child Trust Fund provider to access your account.
To request by post, you’ll need to send HMRC some personal information. The information will differ depending on whether you are the trust fund holder or the parent/guardian seeking details on behalf of a child. Full details can be found at GOV.UK here. You should receive a response from HMRC within three weeks of them receiving your request.
If you’re the main contact for the Child Trust Fund, you’re known as the ‘registered contact’ and will have certain responsibilities until your child takes control of their own account. As the registered contact, you’re the only person who can:
- tell the account provider how to invest the fund and run the account
- change the address and other personal details
- change the type of account, for example from cash to stocks and shares
- move the account to another provider (e.g., JISA)
When the child turns 18, their Child Trust Fund matures, meaning that:
- the child automatically takes over the account
- no more money can be added
The child can either take the money out or transfer it to an adult ISA. Once they have done this, the account will close. Until then, it stays an account that no one else has access to.