Does your child have a forgotten £1,000 nest egg?

Some parents may be unaware, or have lost the details, of children’s money held in Child Trust Funds.

This content is more than 6 months old now, please visit the news area of this site for more recent content

  1. Rob Morgan

Child Trust Funds (CTFs) were once a popular way to put aside money for children.  They were introduced in April 2005 to encourage long-term saving and give all children a financial boost by the time they reached 18.

The government sent vouchers to parents of between £250 and £500 to give accounts a head start, and family and friends could top up the account if they wished. Many vouchers went unused and in these cases accounts were opened by the government on parents’ behalf.

In other cases the accounts were topped up frequently, with parents and others adding money up to the limit each year. The annual contribution limit has risen over the years and is now £ 4,368, the same as Junior ISAs. A child cannot have both types of account.

There were three CTF options available:

Cash: Similar to a Cash ISA, with interest earned on savings paid tax-free.

Stakeholder:  Specific stock market funds with charges capped at 1.5% a year and invested in a mix of investments.

Shares based: A ‘DIY’ choice of investments.

New CTFs were discontinued in January 2011, replaced by Junior ISAs.


Who was eligible?

Child Trust Funds were available to children born between 1 September 2002 and 2 January 2011. The Government initially offered families a £250 voucher when their child was born and another £250 upon reaching the age of seven. Children from lower-income backgrounds were given £1,000 in total.

Before it was scrapped, the scheme was scaled back. Children born between August 2010 and January 2011 received only a £50 voucher or £100 if from a lower-income family. Payments to children aged seven also stopped in August 2010.

Most of the ‘free’ money in CTFs will therefore be just £250 per account, plus interest or investment returns. But children born between 1 September 2002 and 31 July 2003 into low-income families could have a fund worth at least £1,000. If this was invested in stocks and shares it would likely have risen quite significantly by now and represent a decent-sized nest egg.


How do I find out if my child had a Child Trust Fund?

You should have some paperwork from your provider. However, if this has been lost, the easiest way to track it down is to visit HMRC's website and fill out a form. You will need a ‘government gateway’ ID.  HMRC should get back to you within 15 days of your application.


What to do with Child Trust Funds

On 6 April 2015, the government made it possible for people with CTFs to transfer to more flexible Junior ISAs.

There are a number of reasons why it may be a good idea to switch:

  • There are more Junior ISA options in the market to choose from
  • For those wanting cash accounts interest rates are generally higher in Junior Cash ISAs
  • Some Child Trust Funds don't accept new investments
  • For stock market investments Junior Stocks and Shares ISAs are often significantly cheaper than CTF counterparts
  • Junior Stocks and Shares ISAs such as the Charles Stanley Direct Junior ISA have a far wider choice of investments

Before transferring to a Junior ISA, it's important to check the value and if there are any exit fees or guarantees that might be lost if you switch away. Once you have done that you will need to choose a new Junior ISA provider.


The Charles Stanley Direct Stocks and Shares Junior ISA 

You can transfer a Child Trust Fund or an existing Junior ISA to our Stocks and Shares Junior ISA. Just let us know who your current provider is, and we’ll take care of the rest.

You can also start a new Charles Stanley Direct Junior Stocks and Shares ISA for your child if they are a UK resident, under 18 years old, and don’t already have a Child Trust Fund or Junior Stocks and Shares ISA elsewhere.

Full details of the Charles Stanley Direct Junior Stocks & Shares ISA, including charges, can be found here.


This website is not personal advice based on your circumstances. Charles Stanley is not a tax adviser.  Information contained in this article is based on our understanding of current HMRC legislation.  Levels of taxation are dependent on individual circumstances and may be subject to change in the future.  If you are in any doubt, you should seek professional tax advice. No news or research item is a personal recommendation to deal. Investment decisions in fund and other collective investments should only be made after reading the Key Investor Information Document or Key Information Document, Supplementary Information Document and Prospectus. If you are unsure of the suitability of your investment please seek professional advice.

More from author

  1. Rob Morgan

    How you can invest little but often

    Date: 19th Jan 2021 12:57pm

    Investing regularly can help counter stock market volatility and build a substantial ...

  2. Rob Morgan

    UK equities – why the recovery story could be underway

    Date: 18th Jan 2021 11:40am

    Covid disruption, protracted Brexit negotiations and a dividend drought led to weak r...

  3. Rob Morgan

    GVQ UK Focus – removed from the Foundation Fundlist

    Date: 14th Jan 2021 09:09am

    We remove this unconstrained UK fund from our list of preferred funds for new investm...

Most read articles

  1. Does your child have a forgotten £1,000 nest egg?

    J&J’s vaccine candidate is the shot in the arm the economy needs

    Date: 22nd Jan 2021 06:38am

    Science may be about to score its biggest victory against Covid-19 since it emerged i...

  2. Does your child have a forgotten £1,000 nest egg?

    How you can invest little but often

    Date: 19th Jan 2021 12:57pm

    Investing regularly can help counter stock market volatility and build a substantial ...

  3. Does your child have a forgotten £1,000 nest egg?

    The US-China relationship is important to the future of markets

    Date: 15th Jan 2021 10:06am

    The relationship between the world’s two largest economies is important to how econom...

Investment involves risk. You may get back less than invested.