Recently, the BBC ran an article in which they highlighted the fact that many young people do not realise they have Child Trust Funds until they turn 18.
“New figures suggest £1.4bn belonging to 728,000 people is ready to be claimed now they have turned 18 – but many do not know the accounts exist, according to a charity that traces lost funds.”
This staggering amount of money should serve as a wake-up call for parents who have yet to set up a Child Trust Fund or discuss it with their child.
What is a Child Trust Fund?
A Child Trust Fund is a long-term, tax-free savings account set up for children born in the UK between 1 September 2002 and 2 January 2011.
It was introduced by the Government to encourage saving and provide young adults with a financial boost when they turn 18.
The Government initially contributed a voucher, typically £250, to kickstart the account, with families able to add further contributions.
The funds could grow through investment or savings over the years, with the average CTF now estimated to hold around £2,000.
Once the account holder turns 18, they can withdraw or reinvest the money.
What to do if you think you may have set up a Child Trust Fund
If you believe you may have set up a Child Trust Fund but cannot remember the details, you can trace it through the Government’s online tracing tool, which requires you to log in with your Government Gateway account.
You will need your child’s National Insurance number or birth certificate details to complete the search.
Alternatively, you can contact HMRC for assistance.
Once located, you can access the account, review its value, and decide how best to use or reinvest the funds.
Alternatives to Child Trust Funds
If your child does not have a Child Trust Fund or you are looking for other ways to save for their future (now that they are no longer available), there are several options to consider.
Junior ISAs (Individual Savings Accounts) are a popular alternative, allowing parents or guardians to save or invest up to £9,000 per tax year in a tax-free account.
You could also explore setting up a regular savings account, which might offer competitive interest rates and flexible access.
For long-term saving, consider investment accounts or trust arrangements that can grow alongside your child’s needs.
Each option has its own benefits and considerations, so it is worth comparing them to decide what best suits your family’s goals.
If you would like help preparing for your child’s future, please get in touch with our advisers.