CTF ACCOUNTS: There is important information on how to make account payments and manage family investments.
The Child Trust Fund was available for children who were born between the 1st of September 2002 and the 2nd of January 2011.
Back then, it was a child savings account used to deposit free cash vouchers.
Government Child Trust Fund Closure
Note: You are unable to apply for a new Child Trust Fund because the scheme has already closed. Having reduced the scheme a few months prior, the UK Government then made a complete official closure to any new funds.
They announced the Child Trust Fund closing date of January 2011. The Junior Individual Savings Accounts (ISA) are an alternative option for those who are looking to make family investments for children.
Existing Child Trust Funds
If you already have an existing Child Trust Fund you can continue adding up to a maximum of £9,000 per year to the account.
The money ‘officially’ belongs to the child and they can control or manage the account when they get to 16. But, they cannot withdraw from the fund until they reach 18 years old.
Child Trust Fund income or profit is not liable for tax. It does not affect any other tax credits or benefits that you receive. Check with your provider if you need more information about an existing Child Trust Fund account.
Responsibilities of the Registered Contact
You must keep records of official paperwork if you are the main contact of the account. This includes the account statements, details of the account type and the provider, and your child’s Unique Reference Number (found on your annual CTF statement). The registered contact is also the only person who has permission to:
- Inform the account provider how to run or invest the fund.
- Change the account to a another type of account or move the investment account to another provider.
How to Change a Registered Contact?
You can change the registered contact to another person. It should be someone with parental responsibility for the child (e.g. a parent, legal guardian, or step-parent).
Both parties must agree if you are changing the registration. Contact your Child Trust Fund provider to learn how to change the registered contact.
Managing a CTF Account
The principle contact for a Child Trust Fund account is also called the ‘registered contact‘. As such, you have certain responsibilities to uphold until the child reaches the age of 16. The child can legally manage their own account after they become sixteen years old.
When the Child is 16 Years (or 18)
Your child takes over running and managing the account when they reach 16 by applying to the fund provider. The teenager can also take the money out of the account when they reach 18 years old.
Moving a Child Trust Fund to a Junior ISA
Contact a Junior ISA provider if you want to move a Child Trust Fund. They will help you transfer the money and close the old account.
Adding Money to the Account
Even though anyone can deposit money into a Child Trust Fund (CTF) account, the maximum you can add is £9,000 a year. The year begins when the child has their birthday and finishes the day before their following birthday.
Stakeholder accounts allow you to pay money in by direct debit, standing order, or by cheque. Savings or share accounts may use a different system so it is best to check with your fund provider.
Note: Depositing less than the £9,000 limit does not entitle you to carry any unused amount to the following year. Government payments do not count towards the maximum amount. That is unless they are payments made by a local council to a child which they are taking care of.
Child Trust Fund Accounts on Child’s Behalf
Some local authorities manage Child Trust Funds on behalf of children they are taking care of. These accounts have an Official Solicitor (or the Accountant of Court in Scotland) acting as the registered contact.
The Official Solicitor manages the Child Trust Fund account on behalf of the child until aged 16 or someone takes over parental responsibility (e.g. through the adoption process) and:
- Writes to the child when they take control of the account and sends them account statements.
- Changes the type of account (and provider) if necessary and informs the child why the change was made.
Take Over Account Management
If you are taking parental responsibility for a child and want to manage their Child Trust Fund account you should contact the Share Foundation. They will need evidence of your right to parental responsibility, such as an adoption certificate.
Once you get a letter confirming that you can take over responsibility, you should show it to the Child Trust Fund provider who can then update the account for you.
The Official Solicitor will write to a looked after child about eight weeks before they reach their 16th birthday. They will provide information of how to become the registered contact for their account. The child can then begin managing the account from 16 and withdraw money when from 18 years if they choose to take control of the account.
Account Procedures if Child is Terminally Ill (or dies)
You can withdraw money from a Child Trust Fund (CTF) account if the child is terminally ill. The money will pass to whoever inherits their estate (property and possessions) if the child dies.
For the purpose of a Child Trust Fund, ‘terminally ill’ means they have a disease or illness that is going to get worse and in fact are unlikely to live for more than 6 months. Only the registered contact can take money out of the account of a terminally ill person.
In this situation you need to fill in the terminal illness early access form to let HM Revenue and Customs know that your child is terminally ill and you want to take the money out of their account. HMRC may ask you to provide evidence that your child is terminally ill.
As a rule, if your child dies the person who inherits the child’s estate is one of the parents. However, in some circumstances it could be the husband or wife of the child if they were married. Your Child Benefit would continue for a short time even for a child who has died.
Note: You need to inform the Child Trust Fund account provider. They are likely to ask for proof such as wanting to inspect the death certificate.