Trace teens’ cash for free
PARENTS and grandparents are being urged to check whether younger family members have thousands of pounds sitting unclaimed in a forgotten child trust fund (CTF).
Around 430,000 CTFs have been forgotten, HMRC figures show, with an average value of almost £2,000.
Children aged between 13 and 21 may have access to CTFs, which can be tracked down using a free HMRC tool, but many families do not realise this is an option.
Others risk getting ripped off by operators charging hundreds of pounds to track down a CTF, which can be traced for free via HMRC.
Around 6.3 million tax-free CTF accounts were set up for children born between September 1, 2002 and January 2, 2011.
They were replaced by the Junior Isa, a more flexible savings vehicle for under-18s.
CTFs do have one advantage over the Junior Isa. Even if the child’s parent or guardian did not set up a CTF when they were born, HMRC would have opened an account on their behalf. It did this for around one in four eligible families.
Each child originally received a free government-funded voucher for £250, or £500 for lower-income families.
Some got a further £250 or £500 top-up at seven, although these free payments were scaled back in August 2010. Family and friends could make annual contributions on top, with the current maximum £9,000 a year, in line with the Junior Isa.
If the parents failed to invest money in cash or shares, the government automatically invested the voucher in a stakeholder fund.
Around 1.8 million children whose parents did not actively set up a CTF still have access to one, plus the years of investment growth on those top-ups.
The money belongs to the child who can take control of the account when they turn 16, although they cannot withdraw the money until age 18.
In September 2020, the first beneficiaries reached adulthood, with around 800,000 CTFs maturing each year until January 2029.
Joanne Walker, technical officer at the Low Incomes Tax Reform Group, said CTFs mature on the 18th birthday of the person they belong to. “At that point they can decide whether to take the money or transfer it into a tax-free adult Isa.”
Unfortunately, tens of thousands risk missing out, often those from low income families. “Some parents have forgotten they have an account, or don’t know where it is,” she said.
Walker said organisations are targeting young people via social media offering to trace and withdraw their money for a fee.
She is urging youngsters and their parents or guardians to use the free tool at Gov.uk/child-trust-funds.
Even if they do not know which bank, building society or investment company holds their CTF, families should be able to track down the account using the child’s date of birth and National Insurance number.
Another free tracing service is available at Findctf.sharefound.org/.
In total, an estimated £1.7billion is sitting unclaimed, at a time in life when young people need it most.