Detailed

Overview
Who is eligible?
What will my children get?
What is the voucher worth?
Types of Child Trust Fund Accounts
How do I get the voucher?
Change Child Trust Fund Providers
Compare Child Trust Funds
Other related articles from MyEggNest
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The Child Trust Fund is important and unusual because it is the first universal benefit created by the government since the 1950s and unlike many government policies, it is long-term with the money being tied up for 18 years. It is clearly aimed at changing attitudes and behaviour.

The aim of the Child Trust Fund (CTF) is to encourage you to save for your children’s future. It is a long-term savings and investment plan from the Government for children living in the UK and who were born after 1 September 2002. However, you must claim Child Benefit to be able to claim the CTF.

After your claim for child benefit is successful, the Government will send you a £250 voucher. Children in families with a household income below £14,155 (2006/2007) can receive an additional £250 through the Child Tax Credit Award.

In addition to the money paid into the account by the Government, you, your family and friends can contribute up to £1,200 each year. It is important to bear in mind that the allowance cannot be carried forward to the next year. If you save £200 in one year you cannot save £2200 in the next. You can only save the maximum of £1,200 EACH year.

There will be no income tax or capital gains on this savings and you do not have to declare it on your tax returns. In addition, having the fund will not affect any benefits or tax credits you receive.

If you don’t claim it straight away, the Government will bank it on your behalf at a Child Trust Fund provider of their choice. Don’t forget, if you fail to claim this, you are losing interest. Don’t delay. At the very least, put it in a children's savings account and then decide what to do with it at a later date.

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Although your children will only be able to access their accounts when they reach their 18th birthday, they start managing the account when they are 16 years old.  A key part of the CTF is that children learn how best to use the money. At no stage during the 18-year term can money be taken out of the account once it has been paid in.

Who is eligible?

Children born on or after 1 September 2002 are eligible for the CTF, as long as: 

• Child Benefit has been awarded for them; 
• they are living in the United Kingdom; and 
• they are not subject to immigration controls.

Note: children born between 1 September 2002 and 5 April 2005 had to be living in the UK on or after 6 April 2005 to be entitled to the CTF . The children of Crown servants - including the Armed Forces - posted abroad qualify because they are treated as being in the UK.

What will my children get?

All eligible children born between 1 September 2002 and 5 April 2005 will have received a Child Trust Fund voucher to start their account.

Eligible children born on or after 6 April 2005 will receive their voucher shortly after Child Benefit has been claimed and awarded for them.

If your child was born between 1 September 2002 and April 2005, and you have claimed Child Benefit for that child, you should have already received your child’s voucher by now. If not you should call the CTF Helpline. 

As well as the CTF voucher, children in families with low incomes will get an additional payment from the Government.

What is the voucher worth?

The voucher will be worth £250 if you were awarded Child Benefit for your child on or after 6 April 2005. If Child Benefit was awarded before that date the voucher will be worth slightly more than £250 depending on when your child was born. Child Benefit is awarded from the Monday following the birth of a child, so Child Benefit for children born on 4 or 5 April 2005 will be awarded from Monday 11 April 2005, and they will receive a voucher for £250. You can check the amount using the table below:

Date of birth of your child	Value of voucher
1 September 2002 - 5 April 2003	£277
6 April 2003 - 5 April 2004	£268
6 April 2004 - 3 April 2005	£256
4 April 2005 – onwards	£250

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Don’t worry, providers know that there will be vouchers for different amounts so they will not be surprised to receive vouchers for more than £250.

The Child Trust Fund voucher is your key to opening a CTF account for your child. The voucher represents money from the government for your child, and it can only be used to open a CTF account. Once you open the account the provider will pass the details to HM Revenue & Customs so that the payment can go into your child’s CTF account. 

Types of Child Trust Fund Accounts

There are three types of Child Trust Fund accounts that you can choose:

Cash accounts
This is most basic type of CTF account and the most secure. This acts like a normal savings account where the money you invested will be returned with interest.  However, the main disadvantage of this account is that, while it pays interest, it is less likely to grow as much as an account that invests in shares.

Compare Child Trust Fund Cash Accounts here

Shares
Investing in shares is inherently more risky than putting it in a savings account as the value of the shares can go up as well as down.  However, most Financial Advisors will tell you that based on past experience over the last 40 years the money invested in shares over a long period of time usually does better than money invested in a savings account.

Compare Child Trust Fund Shares Accounts here

Stakeholder

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Stakeholder CTFs invest your children's money in shares in a variety of companies when the account is opened.  However, when your child turns thirteen, the money in the account begins to be moved to lower risk investments or assets (this is called styling). This protects your children's money from stock market losses as they approach their 18th birthday.  You can top your CTF up to £1,200 per year and as little as £10 per month.  The fees for these accounts have been limited by the government to no more than 1.5% a year - which means the charge can be no more than £1.50 for every £100 in the account. The charges on all other types of CTF accounts are not limited in this way. 

Compare Child Trust Fund Stakeholder Accounts here

How do I get the voucher?

All you have to do to get a voucher is claim Child Benefit for your child. Once Child Benefit has been awarded, a CTF voucher will be sent out to you automatically as long as your child is eligible.

Don’t worry if you claimed Child Benefit some time ago because your child was born in 2002 or 2003. HM Revenue & Customs will be sending out vouchers for all eligible children for whom Child Benefit has been claimed. These are the dates when vouchers were issued.

Birth Date	Issue of the CTF Vouchers began from
September 02 - March 03	mid January 2005
April 03 - March 04	early February 2005
April 04 – December 04	mid February 2005

If you need more information on the CTF, please contact the CTF office at the address below:

Child Trust Fund Office
Waterview Park
Mandarin Way
Washington
NE38 8QG

Child Trust Fund Helpline
Tel: 0845 302 1470

Change Child Trust Fund Providers

Once you have invested in a CTF and you find a better performing fund elsewhere, rest assured you can switch. You can change your provider at any time and they cannot charge you for transferring the account. However, if your child holds a stakeholder account or some other account that invests in shares, the provider may deduct costs (such as stamp duty and dealing charges) in selling any stocks and shares that form part or all of the account.

It's always best to check with your provider before going ahead and making the change. It would also be a good idea to check with the new provider how long the transfer should take.

Compare Child Trust Funds

Click here to see the latest comparison table for your Child Trust Fund's Cash, Shares and Stakeholder Accounts.

Child Trust Fund Overview
Claiming Child Benefit
CTF Providers and Parents Reviews

Download

• Child Trust Funds Introduction
• Child Trust Funds Toolkit
• Child Trust Funds
• R85 (tax free application form)

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To download the free version of Adobe PDF reader, please click

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Advertisement Child Trust Fund, you could get your child’s savings off to a flying start with £250 free from the government, click here for more information.

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MyEggNest's Recommendations Alternatives to CTFs - Tax-Exempt Savings Plans Did you know there are alternatives to the CTF that offer the same tax-free savings? Tax-Exempt Savings Plans (TESPs) can help you build up a lump sum for your child through small, regular payments. Your fund grows free from any income or capital gains tax, and can be used to save for children of all ages. Click here for more information about TESPs, and specific plans offered by friendly societies.

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