I just read my November 2021 TAXLine magazine. It said 55,000 Child Trust Funds mature every month and many are unclaimed.
Do you remember Child Trust Funds? If not, I’ve done some research to remind you.
A Child Trust Fund is:
- To encourage young people to invest and undertstand in stocks and shares the Labour government sent up Child Trust Funds
- Children born between 1 September 2002 and 2 January 2011 in receipt of child benefit qualified a free voucher to invest of £250 (£500 for low-income households)
- Free top-ups of £250 / £500 were addeded on the childs 7th birthday
- Few children got the top up as the collation government closed the scheme as an austerity measure on 2 January 2011
- Anyone can pay in up to £9,000, a year in extra payments
- The money belongs to the child and they can only take it out when they’re 18
- They can take control of the account when they’re 16
- There’s no tax to pay on the Child Trust Funds income or any profit it makes
- It will not affect any benefits or tax credits you receive
What to do with the Child Trust Fund payout?
I remember reading that the idea behind the Child Trust Funds was to introduce young people to the concept of investing. At 18 they could use the funds for future investing.
I contacted my sister as my niece had a fund set up and is now 18 and eligible to cash it in. My niece promptly cashed in the fund to buy a personalised car number plate. The funny thing is my niece doesn’t have a car and has failed her driving test twice.
I spoke with a customer with an 18-year-old daughter. He said she cashed in £3,000 from her fund and she spent it on going to the gym and clothes. The £3,000 was all growth without any extra payments to the fund. He said she got lucky as most of her mates got £600.
How to claim the Child Tax Fund?
18/19-year-olds born after 1 September 2002 should now claim their Child Trust Fund.