Has your teenager got a forgotten £250-£1,000 in a government Child Trust Fund to claim?
Teenagers turning 18 in September will be able to access £500 or £1,000 - but there is concern that many families have forgotten all about it.
A Child Trust Fund scheme set up by the last Labour government gave every newborn from September 2002 to January 2, 2011 cash vouchers.
These were worth £250, or £500 for those from the poorest third of households.
For a time, there was also a top-up of a further £250 - or £500 for those in lower-income households - added when the child reached the age of seven.
The scheme was launched in 2005 but backdated to September 2002, following a Labour election pledge.
Some 9,189 accounts were set up in Cambridge.
The scheme, designed to encourage parents to save for their children, was scrapped by the coalition government in 2011 and replaced with Junior ISA, which did not come with cash vouchers.
The bonus paid at age seven was stopped for those who had reached that age after August 1, 2010, meaning the double payment will only be accessible for those born between September 2002 and July 31, 2003. All other children covered by the scheme will have the £250 or £500 payments in their fund.
Parents were able to open a Child Trust Fund at a bank or building society, leaving it to earn interest, or place the money into a stock market-based fund.
Parents, family members, friends and the child are still able to put up to £9,000 a year into a Child Trust Fund.
One of the issues with the fund, however, is awareness.
The charity The Share Foundation estimates approximately one million people have a Child Trust Fund without knowing it because their families have moved house and have not updated their provider or they may have lost their provider information.
When the scheme was scrapped, the Liberal Democrats called the fund a “gimmick”.
But Cambridge’s Labour MP Daniel Zeichner said: “The Child Trust Fund was designed to give every child the best possible start in life and to create a savings culture. This is the difference having a Labour government makes.
“People turning 18 today and for years to come will be the beneficiaries of their foresight and Labour’s determination to make lives better and society fairer. It is so galling that the Lib Dems and Tories destroyed a once in a lifetime chance for so many young people.”
Frequently answered questions
I didn’t set up an account. Will my child have one?
Yes. About a quarter of Child Trust Funds were automatically set up by HMRC as parents did not set up the account themselves before their child’s first birthday.
How do we claim it?
Visit https://www.gov.uk/child-trust-funds for details or to find an account.
You will need a government gateway ID and password, or you can set one up. You’ll also need a National Insurance number and your child’s unique reference number, which can be found on Child Trust Fund statements.
HMRC pledges to send details within three weeks.
If you need help tracking one down, try visiting https://www.shares4schools.co.uk/useful-resources/find-ctf /.
Do I have to pay tax or will it impact on benefits?
No. The fund is tax-free and it will not impact on any benefits or credits being received.
Can my child spend it on what they wish?
All the money in the fund belongs to the child. They can take control of it at 16, but only take it out at 18. Then, they can spend it on whatever they wish.
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