How to claim a Child Trust Fund as £1.7bn remains untouched

When my two children were born during the first decade of the 2000s, then Chancellor Gordon Brown gave each of them some money. The reason? The Child Trust Fund  (CTF) scheme that awarded each child a cash ‘endowment’. With reports that £1.7 billion of this money is lying unclaimed, you may be wondering how to claim a Child Trust Fund for yourself or your children.

What was the Child Trust Fund?

The Child Trust Fund was launched in 2005. Any child born on or after 1st September 2002 was eligible. They normally received a £250 voucher which could be paid into an approved scheme. Children in lower income families received £500. If a child’s parents didn’t invest the money, the government did so on their behalf.

When a child reached 7 years old, they received another voucher for either £250 or £500. There was talk of giving out another voucher at the age of 11, but this didn’t happen. The scheme was scrapped in 2011.

Money invested in a Child Trust Fund is exempt from Income Tax and CGT. Family and friends are allowed to top up these funds. When a child reaches 18, they can withdraw the money from the CTF. Alternatively they can transfer the pot into an ISA to retain the tax-free status of the investment.

Unclaimed Trust Funds

According to reports in the press, almost a million young adults have failed to claim a Child Trust Fund belonging to them. On average, these unclaimed funds are now worth £1,900.

A report by the Public Accounts Committee found that many account holders either don’t know about their savings or no longer know where they are invested. This includes 42% of 18-to-20-year-olds.

Why are Child Trust Funds going unclaimed?

Part of the problem is that HMRC doesn’t notify young people that their CTF has matured. When a child turns 16, they get a letter with their National Insurance number and information about finding their Child Trust Fund. The problem here is that this is two years before the CTF matures – many young people will forget or not realise they have a fund.

According to this report, a charity called The Share Foundation set up an organisation called The Tracing Group. The aim was to create a register of CTAs. Unfortunately, only four of the 55 financial providers responsible for Child Trust Funds joined.

How to claim a Child Trust Fund

Fortunately, locating and claiming a Child Trust Fund isn’t difficult.

If you are a young person looking for your CTA, the first step should be to talk to your parents if this is possible. If they invested the CTA on your behalf, they should receive regular correspondence from the provider.

Unfortunately, many parents failed to invest Child Trust Funds themselves. As we mentioned earlier, government invested these funds on the child’s behalf. Whatever the reason for not knowing your CTA provider, it’s still possible to find out.

The easiest way to track down a lost CTA is to use HMRC’s online form. You’ll need your National Insurance number. You’ll also need to log in using your Government Gateway account, or create one if you don’t yet have one. Parents and guardians can also ask HMRC for the information. It’s possible to request information about a CTA by post, but the process is a bit more laborious.

So, if you want to make sure you or your child don’t miss out on their share of that £1.7 billion, find your Child Trust Fund here. And remember, if you want to use the money to start a business venture, you’ll need a good accountant like THP!