Have a Cash in a Child Trust Fund
Can your child (or even if you are a teenager yourself) sit on a trust fund that you or your parents have completely forgotten? If you were born between 2002 and 2011 or have children, this may be very good. Read on to find out more about the government’s Children’s Foundation funding program and how it works if you have the potential to get a full pile.
Did You Know About Child Trust Fund?
A Children’s Trust Fund (CDF) is a long-term tax-free savings account for children. They were set up by the government to introduce the concept of saving children and to encourage them to reach adolescence with some savings behind them.
While the program was running, the government sent new parent vouchers of £250 (up to £500 for low-income families) as a “start-up fee” to kick off the fund. These vouchers were distributed to nearly 6.5 million households during the open period of the program.
The project is now closed (replaced by Junior ISA in 2011). This means you can no longer open the CTF. However, if you already have one, you can add up to 000 9000 per year to it. You can control the account when your child is 16 years old. However, they will not be able to access the money until their 18th birthday.
Savings in a child trust fund are not taxable, and having one does not affect any benefits you are entitled to.
Who Can Have Child Trust Fund?
The program is open to children born between September 1, 2002 and January 2, 2011, meaning that if you have a child during this period they may have child trust funds. Likewise, if you were a teenager born at the beginning of this period, you should check with your parents to see if a fund has been opened on your behalf.
When the Fund Reaches Maturity?
The Children’s Foundation funds began to mature in September 2020, with the first children benefiting from the program reaching 18 years of age.
This means that if you (or your child) and you have a fund, you should contact the provider before the fund’s 18th birthday. This will allow you to verify what changes, if any, may occur as the funds mature. You can convert it to a standard adult ISA.
If you do not contact the provider, the child trust fund will be kept in a secure account until you do so.
Not sure if there is a fund, or can’t remember who the provider is? Do not worry. In this article we will tell you how to find it.
What is ‘maturity’?
Maturity when it comes to bank accounts often means that the holder will no longer receive the same interest rate as they did before. However, the government is making legislative changes when it comes to funding the Child Trust. It will also amend ISA regulations to allow savings transferred from mature child trust funds to be deducted from the annual ISA limit. This is definitely good news for those with current finances approaching maturity.
Comparison of Stocks VS Cash:
When you (or your parents / s) open your fund, they have a choice of which provider to go with. When choosing, they may have decided to go with a fund that invested in stocks rather than cash.
If so, this is very good news. According to the insurer NFU Mutual, funds which are invested in stocks actually performed in a better way and returned more than they invested in cash. In some cases, shareholders have doubled the amount their parents have invested.
Your finances may have been invested in stocks rather than cash. In fact, nearly five million accounts are stock investments. It is more than a million invested in cash.
Easy Ways to Find Your Fund:
Fearing that your child may have child trust funds, can’t remember its details? Do not worry. The government has made it easy to find memorable funds.
This page at Gov.uk will take you through the process of tracking a child trust fund. You will need to fill out a form in order to identify the HMRC funding provider. If you are trying to track your own finances, you will need your child’s national insurance number or yours. You can send HMRC details within three weeks of submitting the form.