Child Trust Fund

A simple start to your child’s financial future.

As a parent, it is extremely important that you are fully aware what Child Trust Funds are and what they will mean for your child in the future. This short guide has been created to help with some of the common questions, preparing you in turn to make the best decision for your child.

What is a Child Trust Fund?

A Child Trust Fund (CTF) is a saving account that is available to all children born on, or after, 1 September 2002. Every child born on or after this date is entitled to a voucher from the Government worth at least £250.

How do I get hold of my child’s voucher?

If your child is eligible for a child benefit they will automatically be sent a voucher by the Inland Revenue that will enable you to open a Child Trust Fund on their behalf.

Can my child’s voucher be cashed in?

No, the child’s voucher must be used to setup a Child Trust Fund with an approved Child Trust Fund account manager, such as Leeds Building Society.

What type of Child Trust Funds are available for my child?

Leeds Building Society offer two types of Child Trust Funds, either a cash, non-stakeholder fund or a stock-market based stakeholder fund. The Leeds Building Society cash deposit fund, invests your child’s funds in a cash savings account, where any money you pay in is secured and will steadily accumulate interest over the 18 years. This depends on the amount invested and the rate of interest payable on the account. The Leeds Building Society stakeholder account, supplied by the Children’s Mutual, invests your child’s fund in stocks and shares in the UK stock market. This potentially may offer rates of return that are higher than cash deposits. However, as with all stocks and shares investments, this can involve a higher risk. 

How much can I save on top of the £250?

You can contribute a total of £1,200 per year and any growth in the account will be exempt from capital gains tax and income tax. A year runs from the child’s birthday to their next birthday.

Can anyone else contribute to the account?

Yes, anyone can contribute to the account. Parents, grandparents and any other relative or friend can pay money into the account up to a combined total of £1,200 each year.

Will my child be entitled to any other voucher on top of the initial payment?

In addition to the initial payment, the Government intends to pay a further sum into your child’s account, on your child’s 7th birthday. However the Government has yet to decide how much this will be, but the exact amount will be specified by the Government nearer the time.

How soon can I open an account?

The Inland Revenue launched Child Trust Funds on 6 April 2005, however vouchers have been distributed since January 2005. As soon as you receive your child’s voucher, you can apply to open a Child Trust Fund for that child.

What happens if I don’t use the Child Trust Fund voucher?

If you don’t use your child’s voucher within 12 months, the Inland Revenue will automatically open a stakeholder account for your child, with one of the approved organisations offering Child Trust Fund. However, by opening a Child Trust Fund account yourself, you make the decision as to which provider it will be invested with. 

What if I have misplaced my child’s Child Trust Fund voucher?

If you have misplaced you child’s Child Trust Fund voucher you simply need to contact the Inland Revenue and they will issue a replacement. For up to date contact details please visit: www.inlandrevenue.gov.uk

Can I take the money out before my child is 18?

No, the money cannot be touched by anyone, including your child, until they are 18. Once the child reaches 16, they will need to apply to become the Registered Contact on the account. Please bear this in mind when making deposits, as you will not be able to withdraw any of the money, and any contributions made to the Child Trust Fund cannot be returned to the donor. However, special arrangements will apply for terminally ill children.

When will my child have access to their money?

Your child will have access to the money from their 18th birthday.

Is there any restriction on what the money can be used for?

No, after their 18th birthday, your child can spend the money on anything they choose, for example, university fees or a deposit for their first home.