The Child Trust Fund is a long-term savings and investment account for your child(ren). It was introduced to:
• ensure your child has savings at the age of 18;
• help your child get into the habit of saving;
• teach your child about the benefits of saving; and
• help your child understand personal finance.
Every child born on or after 1 September 2002 is eligible for the CTF, as long as:
Child Benefit has been awarded for them and:
• they are living in Northern Ireland; and
• they are not subject to immigration controls.
You will be sent a Child Trust Fund vouchers worth £250 (or £500 if you are on a low income) when you claim and start receiving Child Benefit for your child. An additional payment of £250 will be made when your child reaches 7, this will also be £500 if you are on a low income. These vouchers can only be used to open a Child Trust Fund account.
What to do with your voucher:
You need to invest your voucher by opening a Child Trust Fund account. If you have received a voucher and have not invested it you can get in touch with us to find out about your options and some more sources of help. If you are not sure what to do with it we can explain how the accounts work, direct you to independent financial advice and help you with any forms that need to be filled in.
How to invest your voucher:
Most banks and building societies offer Child Trust Fund Accounts. There are three main types of Child Trust Fund Accounts:
- A Stakeholder Account - Your child’s money is invested in companies’ shares, so it grows if those shares do well. There are some measures in place to reduce the risks associated with investing in shares.
- A Shares Account (Non-Stakeholder) - Your child’s money is invested in companies’ shares, so it grows if those shares do well. Unlike a stakeholder account, there are no rules in place to reduce the risk of investing in shares.
- A Savings Account (Non-Stakeholder) - This type of account does not invest in shares. It is the cash option and pays interest.
Just as there is a whole range of different bank accounts, there is a wide range of Child Trust Fund Accounts on the market. You should remember that a savings account may not increase as much as an account with shares in it, but the value of shares may go down as well as up.
You can contact us for some advice on this or have a look at the website listed below – you shouldn’t put off your decision if you are not sure – just get some free advice from Gingerbread.
How much to put into the Account:
You can put in whatever you like but there is a maximum of £1,200 each year. Even small amounts like £5 will help in the long run. Anyone can contribute including you, your child’s grandparents, your ex-partner, other family members, friends and in time, your child can put money into the account.
The money in the Child Trust Fund account belongs to your child so you cannot take it out at any time – only the child they can withdraw money from the account when they turn 18. At 18 they can decide how best to use their money - for education, to go travelling or to help them buy a house, for example.
The money in the child’s Child Trust Fund will not affect any other family benefits or tax credits.
How the Child Trust Fund is different from other savings:
• the Government makes a payment for each child, with more for children in lower income families
• the Government will add an additional payment when your child turns seven and are also considering a further
payment at secondary school age
• the Child Trust Fund is a long-term savings and investment account and your child will not be able to take out the
money until they are 18 neither you nor your child is taxed on the money earned in the account;
• it will not affect your benefits or Tax Credits
• a maximum of £1,200 can be saved each year in the account by parents,
• family and friends
• children will learn about the Child Trust Fund in school.
If you haven’t received a voucher or have lost it, call the CTF Helpline:
Tel - 0845 302 1470
You can also get more information from the HMRC Child Trust Fund website:
Website - www.childtrustfund.gov.uk
If you need any more information or advice please contact us:
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Freephone Advice Helpline - 0808 808 8090
Website – www.gingerbreadni.org
Email – advice@gingerbreadni.org |
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