Child Trust Funds
What is the Child Trust Fund?
The Child Trust Fund (CTF) is a government initiative aimed at ensuring that in future all children have a fund at the start of their adult life.
All children born on or after 1st September 2002, who are eligible for child benefit and resident in the UK, will qualify for a CTF account. The Inland Revenue will provide a Child Trust Fund voucher worth £250 with which to open the account and children in families receiving the full Child Tax Credit qualify for a further £250 payment (paid directly into the account).
There are a variety of different accounts available from a number of providers. These include protected cash deposit accounts, and accounts that invest in stocks and shares. There is no need to apply for a Child Trust Fund voucher - your child's entitlement will be automatically linked to their entitlement for child benefit.
So, if your child is eligible for the CTF your child's Child Trust Fund voucher will be sent out to you. You will then be able to open a CTF with your chosen provider.
Parents, family and friends will be able to contribute up to a total of £1,200 a year to a CTF account. Income arising on the money and investments in a CTF account is exempt from tax.
The money in a child’s CTF account can only be taken out by the child on reaching the age of 18. There is no access to the money until then. The account and the money in it belongs to the child, although it is managed by a person with parental responsibility until the child is 16.
When children reach 16 they will manage their own CTF accounts. When a child reaches the age of 18 there will be no restriction on how they use the money in their CTF account.
In the March 2006 Budget Gordon brown increased the amount given to children with a trust fund to £250.00 by the government on their seventh birthday or £500.00 for families on low income.
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