Some people could become eligible for thousands of pounds
HMRC has issued a reminder in a new online alert that certain people may be entitled to a windfall of up to £2,200; however, they must be a certain age to be eligible. These savings are available because the former Labour government set up Child Trust Funds for people born between September 1, 2002, and January 2, 2011.
Initially, the government put down between £250 and £500 (depending on family circumstances). From this, families could add to the account until the child turned 18, when withdrawals became allowed.
People are encouraged to check whether a Child Trust Fund is available for young people. People turning 18 this year, born in 2007 or 2008, will be the latest batch eligible to claim the cash waiting in these bank accounts.
Posting on X, a HMRC spokesperson said: “Your child could have an average of £2,200 sitting unclaimed. If your child has recently turned 18, they may have a Child Trust Fund waiting for them. Find out if they qualify.”
Young people can assume control of the account when they reach 16. There’s no tax to pay on the Child Trust Fund income or any profit it generates, and it doesn’t affect any benefits you receive.
If you’re the main contact for the Child Trust Fund account, you’re called the ‘registered contact’. You have certain responsibilities until the child turns 18, or until the child takes control of their own account, including:
- 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
Once your child turns 16, they can either take over the account by contacting the Child Trust Fund provider or leave you in charge of the account. On a child’s 18th birthday, the Child Trust Fund matures.
This means they automatically take over the account, and no more money can be added. Until the child withdraws or transfers the money, it remains in an account accessible only to the child.
What if my child were born after 2011?
Children born after 2011 will not have one of these funds set up on their behalf. Parents can instead apply for a Junior ISA, a long-term, tax-free savings account for children. More information on doing so is available here.
These work in a very similar way to the Child Trust Fund in that the child can take control of the account when they’re 16, but cannot withdraw the money until they turn 18. These accounts will obviously not benefit from the initial government payment for up to £500, relying completely on contributions from family and other sources.
