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5.8.1 Child Trust Fund

Note: From April 2015, money held in Child Trust Funds will be able to be transferred into Junior ISA's.

RELATED GUIDANCE

Statutory Guidance on Junior Individual Savings Accounts for Looked After Children

See also: The Share Foundation website.

AMENDMENT

This chapter was amended in May 2018 to note that the maximum saving level for Junior ISAs is £4260 pa, see Section 4, Can Additional Payments be Made?


Contents

  1. What is the Child Trust Fund?
  2. Who is Eligible?
  3. How does the Child Trust Fund Work and How Much is it Worth?
  4. Can Additional Payments be Made?
  5. Who can Access the Money in the Child Trust Fund?
  6. Exceptions
  7. Child Trust Funds and Looked After Children
  8. Roles and Responsibilities of Local Authorities
  9. Parental Responsibility


1. What is the Child Trust Fund?

The Child Trust Fund is a savings and investment account designed to give children born on or after 1 September 2002 and on or before 2nd January 2011 a financial start in life and to help teach them the value of saving.

All children born between those dates who are eligible (See Section 2, Who is Eligible?) are entitled to this account including Looked After Children.


2. Who is Eligible?

Children born on or after 1 September 2002 and on or before 2nd January 2011 are eligible for the Child Trust Fund if child benefit has been awarded for them for at least one day before 4th January 2011, they live in the UK and they are not subject to immigration restrictions.

There are special rules for Looked After Children (see Section 7, Child Trust Funds and Looked After Children).


3. How does the Child Trust Fund Work and How Much is it Worth?

For children born on or after 1 September 2002 and 1st August 2010, a voucher worth £250 will be sent to the child benefit claimant with a further £250 for children of families on low incomes. For children born between 2nd August and 2nd January 2011, the voucher was for £50, with a further £100 for children of families on low incomes. A person with Parental Responsibility for the child can then open a Child Trust Fund account for that child with an approved Child Trust Fund provider, e.g. bank, building society etc.

If after a year, no one has opened an account, the Inland Revenue will open an account for the child.

Children whose 7th birthday fell between 1st September 2009 and 31st July 2010 received an extra payment on their birthday of £250 (plus an extra £250 for low-income families/in care).


4. Can Additional Payments be Made?

Anyone can contribute to a Child Trust Fund up to the sum of £4260 per year.

Brighton and Hove Council will not contribute to the fund, but will facilitate such an investment by others.


5. Who can Access the Money in the Child Trust Fund?

Only the child can withdraw money from the fund when he or she reaches 18. No one else can touch it.

The money belongs solely to the child despite the fact that the person with Parental Responsibility manages the money until the child reaches 16. Young people aged 16 and over can take over the management but cannot make withdrawals until they are 18.


6. Exceptions

In the case of terminally ill children, the person with Parental Responsibility can request permission to withdraw funds.


7. Child Trust Funds and Looked After Children

There are special rules for Looked After Children as child benefit is not payable to them whilst they are looked after. If a child benefit award is made for a child before he or she becomes looked after, he or she will be eligible for the fund account in the usual way.

Where a child becomes looked after soon after birth, the Inland Revenue will open a Child Trust Fund account for the child.

Even when the local authority has Parental Responsibility under a Care Order, they are not entitled to open or manage a Child Trust Fund account. Where possible, the looked after child’s parents must be encouraged and helped to take on this responsibility.


8. Roles and Responsibilities of Local Authorities

Local authorities must make returns to HMRC as follows:

Returns for periods up to 6 April 2011

Local authorities must make monthly returns, including nil returns, for all months up to and including the month ending 6 April 2011 of looked after children who were:

  • Born after 31 August 2002 and before 3 January 2011; and
  • Who became looked after for the first time before 3 April 2011.

Where local authorities subsequently discover, for whatever reason, that a child’s details were not included on the appropriate return they should complete a form CT15 (Child) and send it to the Child Trust Fund Office.

Returns from 7 April 2011 onwards

From 7 April 2011, local authorities must make a return each month of any looked after children born after 31 August 2002 and before 3 January 2011, and under the age of 16 at the end of the return period who, in the period covered by the return:

  • Became looked after and have no one (apart from the local authority), or no one appropriate, with parental responsibility; or
  • Were already looked after, but their circumstances have changed so that there is now no one (apart from the local authority), or no one appropriate, with parental responsibility.

This is so that the Official Solicitor / Accountant of Court can manage these children’s CTF accounts. For a child to be treated as having no one, or no one appropriate with parental responsibility, at least one of the six conditions set out at paragraph 5.5 of the Guidance for Local Authorities must apply.

Please remember:

  • To include any child’s details that were not included on an earlier return for a period before or after 7 April 2011;
  • If there are no children to be reported in any month, a nil return is no longer required. No child born on or after 3 January 2011 need be included in any return to CTFO.

NB Local Authority Top-up payments ceased on 31st December 2010.


9. Parental Responsibility

The child’s parent is deemed eligible to manage the Child Trust Fund except in the following circumstances:

  • Where the child lives permanently away from the parent with no face to face contact (including children whose plan is for adoption);
  • Where there is a court order terminating their contact with the child;
  • Where the parent is deemed to have significant mental health problems;
  • Where the child is lost and abandoned and where there is no prospect for reunification.

NB In all cases where the decision is to exclude, legal advice must be sought.

End