Child Trust Fund

 

The Child Trust Fund (CFT) is a new savings and investment account designed specifically for children. This is a government initiative with the aim being to give all children born in the United Kingdom a nest egg for their future. The idea behind the Child Trust Fund is that all children, whether from poor or rich backgrounds, will have a savings plan that they (and only they) can use when they reach 18. The Government are hoping that the majority of children will then use their Child Trust Fund to fund their way through university or an equivalent vocational qualifiaction.

The Child Trust Fund is for all children living in the UK for whom Child Benefit has been awarded and who were born on or after 1st September 2002, they will receive an initial voucher to start their account of a minimum of £250. Children from families with low incomes will receive a further £250 payment. Before parents or carers can receive the voucher, they must first claim and be awarded Child Benefit. Child Benefit is paid regardless of family income and it goes to parents or carers of all children living in the UK, until the child reaches the age of 16. It is essential to claim and be awarded Child Benefit otherwise the child trust fund voucher can’t be sent out.The account belongs to the child and can’t be touched until they turn 18. Additional payments to boost the total repayable amount can be made by parents and/or family members, however, these additional Child Trust Fund savings are limited to a maximum of £1200 in any one tax year. No tax is payable on the interest or gains made in the CFT account.

As parent or legal guardian you have to decide where to invest your childs trust fund and also decide on what type of account you wish to open. There are a huge number of companies who will be vying for your business, but they all offer the choice of three accounts - Saving Account, Equity Account or Stakeholder Account.

On your childs seventh birthday, they will receive a further payment from the government into their Child Trust Fund. The exact amount of this payment is yet to be announced, but as with the first Child Trust Fund payment, children of families with low income will receive more.

One of the ideas behind the Child Trust Fund scheme is to encourage parents to save fro their childrens future and also encourage the child themselves to understand the benefits of regular saving.

We hope you find this website as an informative guide to applying for your childs Child Trust Fund and hope it allows you to make an informed choice. Remember the sooner you open a Child Trust Fund account the more time the money in it has to grow - and grow!