Child Trust Fund
On 11 January 2005 the Chancellor of the Exchequer Gordon Brown and the Minister for Children Margaret Hodge officially launched the Child Trust Fund (CTF) and it became fully operational on 6 April 2005.
Announced in Budget 2003 (PDF file of Chapter 5, Budget 2003), the CTF is designed to strengthen the saving habit of future generations, promote financial education and ensure that at age 18, for the first time, every child will have access to a financial asset
Parents receive a voucher for at least £250 for children born on or after 1 September 2002 and children in low income families receive an additional £250 paid directly into their CTF accounts. To encourage the saving habit, children, parents, family and friends can between them contribute up to £1,200 a year to each account and there is no tax to pay on any interest or gains made on this money.
The Government makes payments to children through the CTF to help build up a useful stock of assets for the child when he or she reaches the age of 18. The CTF will be accompanied by financial education that will encourage the young person to understand the importance and benefits of savings.
The Chancellor announced in Budget 2006 that all eligible children will receive a further payment of £250 into their CTF accounts at age 7, with children from lower-income families receiving £500 (PDF file of Chapter 5 Budget 2006). These payments will be paid on a similar basis to the initial birth endowments.
In October 2006 the Government announced that it would provide an extra £100 per year to every child who spends the year in care, in order that their CTF provides a more significant asset for them to access on entering adult life.
The Child Trust Fund and age-related payments will bring financial education in schools to life. In September 2007, the Economic Secretary and the Secretary of State for Children, Schools and Families announced a package of £11.5 million for teaching personal finance education in schools. A significant portion of this funding ill be used for the development of CTF based resources for use in primary schools.
Budget 2008 announced that, from April 2009, the requirement for providers to receive the CTF voucher from parents before opening the account would become voluntary rather than mandatory (PDF file of Chapter 4 Budget 2008), which will reduce administrative burdens and make account-opening easier for parents, particularly when opening accounts by telephone or the internet.
In Budget 2005 the Chancellor announced that the Government would now consult on further payments into Child Trust Fund accounts at secondary school age (PDF file of Chapter 5, Budget 2005). For more information, including details of the consultation, see the Child Trust Fund secondary school age payments briefing note (PDF file, 92KB).
How can families get more information?
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Visit the Child Trust Fund website; or
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Call the Child Trust Fund helpline: 0845 302 1470
Related links
The Child Trust Fund documents are available in Adobe Acrobat Portable Document Format (PDF). If you do not have Adobe Acrobat installed on your computer you can download the software free of charge from the Adobe website. For alternative ways to read PDF documents and further information on website accessibility visit the HM Treasury accessibility page.
- Press Notice: Child Trust Fund details announced October 2003
- Detailed Proposals for the Child Trust Fund (PDF file, 284KB)
The Child Trust Fund Act and Regulations are available on the HMRC website.