Child trust Funds

What are child trust funds?

Child trust funds (CTFs) are savings and investment accounts for children, with the government giving a voucher to every child born since 1 September 2002 to get them started. The aim is to provide children with a financial fillip at the gateway to their adult life, and help them get to grips with personal finance.

There are three types of CTF: savings, shares and stakeholder.

What are the benefits of child trust funds?

• CTFs are an invaluable tool in teaching young adults how to manage their money.
• The government kick start CTFs with a £250 investment (or £500 for children from lower income families).
• With CTFs, neither you, nor your child will pay tax on the income or gains received.
• CTFs can be rolled over into cash ISAs when children turn 18, therefore the tax free status can be enjoyed for a prolonged period.

What else should I know about child trust funds?

• Not every child is eligible for a CTF, only those born after August 31st 2002.
• Accounts are only operable by the child once they’ve turned 18, so the opportunity for them to fritter away the savings is always there.
• Should you choose the investment route, try to pay as little in charges as possible so your child can keep more of their money.
• If you don't invest your CTF voucher within 12 months, the government will open a stakeholder account on your behalf, thus limiting your options.

Find out more about child trust funds.