Child Trust Fund

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 up to and including 1st August 2010, a voucher worth £250 was 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 opened an account, HMRC will have opened 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 £9000 per year.

Brighton and Hove City 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 became looked after soon after birth, HMRC will have opened 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 The Share Foundation as follows:

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 Share Foundation can manage these children's CTF accounts.

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.

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