Child Trust Fund guide
What is a Child Trust Fund?
The Child Trust Fund (CTF) is a long-term savings and investment account introduced by the government to encourage parents to save for their child's future.
Government changes
When parents of a child born before 1 January 2011 successfully register to receive child benefit by 31 March 2011, they should get a CTF voucher from the government to start their child's CTF account. Children in families whose household income is below the Child Tax Credit income threshold get a voucher worth twice as much.
Will your child be affected?
On 24 May 2010 the government announced a number of changes to the way Child Trust Funds (CTFs) will work in the future. These changes affect nearly all existing Child Trust Fund accounts, as well as parents who haven’t yet used their CTF vouchers and those families expecting a baby.
What are the changes to CTFs?
- If your baby was born on or before 1 August 2010 and you successfully claim Child Benefit by 1 November 2010 you should receive a CTF voucher for £250 (and children in lower income families should receive a £500 voucher)
- If your baby is born after 1 August 2010 and up to 31 December 2010 and you successfully claim Child Benefit by 31 March 2011, you should receive a £50 CTF voucher (and children in lower income families should receive a £100 voucher)
- Children born after 31 December 2010 will no longer be eligible for a CTF and will not receive a CTF voucher from the government
- From 1 August 2010, children will no longer receive an additional CTF payment from the government when they reach age 7
- Existing accounts will remain open but will not receive any further government contributions
- CTF vouchers already issued will continue to be valid until their expiry date
I have received my child’s CTF voucher but not used it yet – can I still use it?
Yes. You will be able to use it up to the expiry date shown on the voucher. If you do not use your voucher before the expiry date, HMRC will open an account for your child.
I am pregnant. Will I still get a CTF voucher when my child is born?
Yes, as long as your child is born before the legislation to stop issuing CTF vouchers comes into place, and your child is eligible. The voucher is triggered by a valid claim for Child Benefit, so you should apply for this as soon as possible.
Will I (or my child) now be able to withdraw the money invested in my child’s CTF account?
No. There are no plans to change anything – only the child can withdraw the money and only when they reach 18.
When government contributions stop, will I be able to open a CTF account for my child anyway (i.e. without a voucher)?
When the relevant legislation is in place, the government intends that HMRC will no longer issue vouchers and it will not be possible to open a CTF account (other than for those who have already received a voucher before this date).
Will the government withdraw the money it has put into my child’s CTF account?
No. The money will remain invested.
My child already has a Child Trust Fund provided by Family Investments – what will happen to it?
If your child is lucky enough to already have a Child Trust Fund, their account will continue to operate as it currently does. But your child will not be eligible for any further government contributions.
You, family and friends can still contribute a combined total of up to £1,200 a year into your child’s account. Remember, any money paid in to the account belongs to the child. Only they will be able to access it, and only when they are aged 18. Top up now
You will continue to receive an annual statement and can still track and manage your child’s account online using the Family Investments Online Wizard service. Register for Online Wizard
As the leading CTF provider 1, Family Investments 2 is committed to looking after the accounts of their 1.1m customers for the next 18 years. Family Investments were market leaders in long-term investments for families before the Child Trust Fund and they expect this to continue in the future.
Who can I talk to for further information?
Call Family Investments 2 Customer Service team on 0800 616695 3 (calls may be recorded and monitored for training purposes).
You can also contact the government’s Child Trust Fund helpline on 0845 302 1470 3 or visit their website at Child Trust Fund site . These contact details can also be used to apply for a replacement voucher if you have lost your child’s voucher.
Please note
In light of the changes to CTFs announced by the government, some information contained in our literature and on our website (including any projections of future value) may not reflect the new voucher amount of £50, or the removal of the additional government payment when a child reaches age 7. We will of course be updating all our communications as soon possible.
The above represents Family Investments’ view of the government changes as at 26/7/2010. It is not exhaustive or definitive and should you have any concerns we would recommend you contact HMRC direct. Family Investments does not provide advice.
Tax advantages depend on individual circumstances and may change in the future
More FAQs
Can parents have the cash instead?
That's not how it works. The government wants each child to receive something at the age of 18. So there's no cash alternative and the money can't be touched by you – only by your child and only when he or she reaches 18.
What do I do with the voucher?
The CTF voucher has to be paid into a Child Trust Fund account. Generally, there are three types to choose from:
- Cash accounts where the capital is secure, and the money will earn interest
- Accounts that invest the money in shares
- Stakeholder accounts invested in shares but with government-devised rules attached to meet certain criteria
If you haven't opened an account within a year of receiving the voucher, the government will open a stakeholder account for your child with an approved provider and send you the details.
Can I open a Child Trust Fund account with Barclays?
Yes. We've teamed up with the UK's favourite Child Trust Fund provider 1 – Family Investments 2 – to offer a stakeholder CTF account. Family Investments look after the CTF accounts of over one million children so you can be confident your child's money is in expert hands. As this is a stakeholder account the value can fall as well as rise and your child may get back less than has been paid in. Learn more about our Child Trust Fund
Can I add money to my child's account?
Yes. You and your relatives and friends can add up to £1,200 a year between you. Once funds are paid in, they stay in until the child is 18.
However, if you also want to save for your child while being able to take out money for special events, you could open another type of account, such as the Barclays Children's Savings Account. If you'd like more adventurous investment opportunities, Barclays offers a range of savings, investment and protection products. However, these may require you to save larger amounts and tie up your money for longer periods.
What will the Child Trust Fund account eventually be worth?
That depends on the type of Child Trust Fund account you choose and how it's affected by inflation, interest rates and stock market fluctuations. It also depends, of course, on how much additional money you put into the account.
Is it taxable?
Returns on CTF accounts are exempt from income tax and capital gains tax. Your entitlement to other family benefit and tax credits isn't affected either. Remember, tax advantages depend on individual circumstances and may change in the future.
Child Trust Fund
- A voucher from the government
- Tax-efficient
- Invest for your child's future
Children’s Savings
- Get instant access to savings
- Open from £1
- No maximum on what you can save