Money Advice Service

Child Trust Funds (CTF) were introduced in 2002 to encourage saving for children. Though they’ve since been replaced by Junior ISAs, those with existing accounts or vouchers get to keep their Child Trust Funds. Here’s more on how they work and information on how to transfer an account.

What is a Child Trust Fund and who qualifies for one?

Child Trust Funds were available to children born between 1 September 2002 and 2 January 2011 but have now been replaced by Junior ISAs.

Child Trust Funds are tax-free children’s saving accounts set up by government to help make sure that every child that qualifies, arrives at adulthood with a savings account.

If your child was born after 2 January 2011 or before 1 September 2002 (and is still under 18), or didn’t qualify for a Child Trust Fund, they can get a Junior ISA instead.

Even though this scheme has stopped, existing Child Trust Fund accounts can continue until the child is 18 and children who qualified for a Child Trust Fund are not eligible for Junior ISAs.

From April 2015 anyone with money in a CTF can transfer it to a Junior ISA.

Looking for more information? Read our guide to Junior ISAs

How a Child Trust Fund works

  • HM Revenue & Customs (HMRC) sent the parents or guardians of qualifying children a starting payment voucher of £50 or £250, depending on when your child became entitled to an account. This voucher could then be used to set up a Child Trust Fund account in the child’s name.
  • Money in a Child Trust Fund account belongs to the child and is ‘locked in’ until they turn 18.
  • There are three types of account that can be opened with the voucher - ‘stakeholder’, share or savings account. Either way, your child doesn’t have to pay tax on the income or gains (profit) they make in their account. And, the money your child gets won’t affect any benefits or tax credits you receive.

Family member payments to a Child Trust Fund

Parents, family members and friends can between them pay in up to £4,260 (2018/19) each year, with the child’s birthday considered the start of the year.

Extra payments to a Child Trust Fund from government for certain groups

Did you know?

By putting just £10 a month away for a child at birth they could have a pot of well over £2,000 by the time they are 18, and if you could manage to save the maximum every year it would be more than £65,000.

Choosing or moving your Child Trust Fund

To find out more about the three types of account and which might be suitable for your child follow the link below.

If you want to change the Child Trust Fund account that HMRC set up for you

If HMRC set up an account for your child, you can change to the provider or account of your choice at any time.

You should check for any charges from the provider for switching but before doing so, you’ll need to be the registered contact on the account.

This article is provided by the Money Advice Service.