Child Trust Fund - Key Features

• The Child Trust Fund (CTF) is a savings and investment account for children.
• Children born on or after 1 September 2002 are eligible if child benefit has been awarded for them and they live in the UK.
• There is no need for parents to claim Child Trust Fund - Once a child benefit award has been made and eligibility for the CTF accepted, a voucher worth £250 for the initial Government payment will be sent to the child benefit claimant, who will usually be the parent. A person with parental responsibility for the child can then use the voucher to open a CTF account for that child.
• An additional £250 will be paid into the CTF accounts of children in families eligible for full Child Tax Credit (CTC) with household income at or below the CTC income threshold (£15,575 for tax year 2008-09).
• All eligible children born on or after 1 September 2002 will receive a further payment from the Government of £250 into their CTF accounts at age seven. Children in families who qualify for full CTC with an income below the CTC threshold on the child's seventh birthday will qualify for an additional £250.
• Parents are sent an information pack giving them details of what they need to do, and information is available on the dedicated website www.childtrustfund.gov.uk and from a CTF helpline 0845 302 1470.
• There are a range of CTF accounts to suit everyone’s needs. All providers make available a stakeholder CTF account. Charges for this account are kept low and the account is designed to give good returns over 18 years by investing in the stock market. The risks are controlled by making sure that there is a mix of investments and that they are less risky as the child nears the age of 18.
• If an account is not opened before the voucher expires (usually 12 months from issue) HM Revenue & Customs will open a stakeholder CTF account for that child.
• Special arrangements are in place for looked after children (as child benefit cannot be claimed for these children) to ensure that they do not miss out on a CTF account.
• Parents, family and friends are able to contribute up to a total of £1,200 a year to a CTF account. Income arising on the money and investments in a CTF account is exempt from tax.
• The money in a child’s CTF account can only be taken out by the child on reaching the age of 18. There is no access to the money until then. The exceptions to this are when the child is terminally ill or the child has died.
• The account and the money in it belongs to the child, although it is managed by a person with parental responsibility until the child is 16. When children reach 16 they will manage their own CTF accounts.
• When a child reaches the age of 18 there will be no restriction on how they use the money in their CTF account.
• Financial education is a key part of the CTF and all children will receive financial education to help them manage their money with future needs in mind. Information will be available for parents, teachers and children over the lifetime of a child’s CTF account.
• The CTF account and the income and gains from that account will not affect family benefit and tax credits during the time the CTF account is open.