If you have a Child Trust Fund set up on your behalf or are managing one for someone else, here are all of the details of how they work, who controls them and how you can find your account
What are Child Trust Funds?
Child Trust Funds are a long-term tax-free savings account for children born between 1st September 2002 and 2nd January 2011. The scheme closed in 2011, meaning that no new accounts can be made. However, money can still be transferred into existing accounts.
How do they Work?
Up to £9,000 a year can be added to existing Child Trust Fund accounts, and anyone is allowed to pay into it. If this £9,000 allowance is not used up, it cannot be transferred over to the next year.
As soon as money is transferred into the account, it belongs to the child in question, they just aren’t allowed to spend it until they reach 18.
Who has Control?
The registered contact is the main contact for the account. They are the person who can change the type of the account, tell the provider how to run it, change personal details on it, and transfer the account to a Junior ISA. If someone in care has a Child Trust Fund, The Share Foundation acts as this registered contact.
When the child reaches 16 they have the choice to take over control of the account by contacting the provider it’s held with. Alternatively, they can leave the registered contact in charge.
When they 18, the Child Trust Fund matures, as they’re no longer legally classed as a child. When this happens, they will automatically take over the account if they haven’t already at age 16. No more money can be added to the account at this stage. They then have the option to withdraw the money or transfer it into an Adult Individual Savings Account (ISA).
If they die before 18, the money from the account is paid to whoever inherits their estate, which is usually a parent or guardian.
Exceptional Circumstances
If the child is terminally ill, the registered contact can fill in a terminal illness early access form to HM Revenue & Customs (HMRC) to withdraw the money early.
If the child lacks the mental capacity to manage their account once it matures, their parent, or a close friend or relative, can apply for a financial deputyship order. This will give them control of the account once the child turns 18.
Finding an Account
If you can remember who the account is held with, you can contact the provider of the Child trust fund Directly.
If not, you can ask HMRC where the account was originally opened, either by filling in a form online or requesting the details by post.
For the online form, you will need the child’s unique reference number, which can be found on letters from HMRC or the Department for Work and Pensions. If your child is over 16, you can use their National Insurance number instead.
If sending by post, you will again need to include this alongside your full name and address, the child’s full name and address and the child’s date of birth.
Finding your own Account
If you’re over 16 looking for your Child Trust Fund, you can contact the provider of the account directly.
If you don’t know who the account is held with, you can submit an online form to HMRC to see where the account was originally opened. You will need your National Insurance number for this.
Alternatively, you can ask HMRC by post. You will have to include your full name and address, your date of birth and your national insurance number.
Junior ISAs
Child Trust Funds have been replaced with Junior ISAs which operate pretty much the same, bar a few differences.
Child Trust Funds offered options of cash, shares and stakeholder, whilst Junior ISAs only offer a Junior Cash ISA and a Junior Stocks and Shares ISA.
Additionally, a Junior ISA will automatically change into an Adult ISA once the child turns 18, encouraging them to continue saving.