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How to trace a lost Child Trust Fund

  • Six million young people have a Child Trust Fund (CTF) in the UK.
  • More than one in six have been lost or left dormant.
  • The HMRC estimate approx. 700,000 CTF accounts are inactive.
Posted in: Finance
A woman and her daughter play with a piggy bank and an abacus.

Some six million young people across the UK have a Child Trust Fund, but research suggests that more than one in six of them may have been lost. Figures from HMRC estimate that around 700,000 CTF accounts are dormant while other analysis suggests up to one million accounts, holdings savings worth more than £600m, could have the wrong contact details on them.

The first children who received a CTF account will be turning 16 next year, and we’re urging those who have lost their accounts to track them down.

Child Trust Funds, or CTFs, are a savings account which were given to the majority of babies born between September 2002 and 2 January 2011. As part of the scheme, every account was credited with up to £500 free from the Government, and parents, relatives and friends could save more tax-efficient each year to boost their child’s savings. In the current CTF year (based around the child’s birthday) parents can put aside up to £4,128 in these accounts.

CTFs were a landmark innovation, designed to kickstart good saving habits and help parents get their children started.

Around a quarter of CTFs were automatically set up by HMRC as parents did not set up the account themselves before their child’s first birthday. Others will have got lost along the way over the years.

Justin Modray, founder of Candid Money, says: ‘If you think your child has a CTF then it is well worth tracking down. Aside from finding out how much it’s worth, it’s a good idea to ensure it is invested wisely.’

If you know which provider your CTF is with then the first step is to contact the company and ask for an up-to-date statement and to find out what your options are. It is vital to check whether there are any exit fees or penalties involved in moving the account.

For those who have lost their CTF entirely or are not sure whether their child has one, the best way to track it down is through the HMRC’s dedicated page. Parents can fill in some basic information about them and their child and leave the taxman to do the detective work.

Finding a CTF and starting positive saving habits should also stand your child in good stead when they come to start saving for themselves. Once a child reaches 16 they will be able to take over the running of the account, though they won’t be able to access any of the cash savings for another two years. The account matures when a child hits 18 and they are then free to save, invest or spend the money how they choose.

Mr Modray says: ‘When your child gets their hands on their CTF or Jisa at age 18 there is nothing to stop them spending the money. By default the account will roll into an adult Isa account and if you can encourage your child to keep it there until they really need the money then that is all the better.’

Parents should try to start educating their children in the importance of saving, because they could be set for a hefty windfall when their account matures – a parent who had saved just £25 a month since their child was born, along with an initial £250 from the Government, could have built a pot of more than £5,500 by the time their child reaches 18.

What their child does with the money depends on their circumstances. Once a child turns 18 they will have an even wider range of tax-efficient savings accounts to choose from. Those who think they might need to use the money in the near future can keep it safe in a Cash Isa account, while those looking to invest for the long term might opt for a Stocks & Shares Isa. The newly introduced Lifetime Isa could be a great choice for young savers hoping to get a foot on the property ladder.

These are tax-free savings accounts for those aged 18 to 39. Savers can put £4,000 per tax year into the account and the Government will top up the balance by a generous 25 per cent. The money is locked into the account until the saver reaches a particular age unless the cash is used as a deposit to buy a first home. The money can be accessed but there’s a charge for doing so. The Lifetime Isa, or Lisa, was only launched in April 2017 so only a few providers are currently offering it.

Ms Bowes, director of Savings Champion, says: ‘A CTF is just like any other savings account, it is important to shop around and ensure you have a competitive rate. Long-term accounts such as these are easy to forget about but it’s important to keep track of any savings you have because they could easily be earning nothing.’

Note: Whilst we take care to ensure Hub content is accurate at the time of publication, individual circumstances can differ so please don’t rely on it when making financial decisions.