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child trust fund

All children born between 1 September 2002 and 2 January 2011 were entitled to a Child Trust Fund (CTF). The Government provided an initial endowment of £250 at birth (£500 for children from low-income families who also qualify for the full Child Tax Credit). A further payment was made when the child reached the age of seven, (again of £250, or £500 for children from low-income families). Parents, other family members and friends are allowed to make additional contributions to the fund. Tax is not payable on income or gains within a CTF. The assets of the fund will be accessible without restriction when the child reaches 18 years of age.

The Coalition Government phased out payments to CTFs, with the last contributions being made in April 2011. Following an announcement in the June 2010 Budget, the Government first reduced its contributions to CTFs and then stopped these contributions altogether. It is still possible for parents and others to make contributions into existing CTFs, but no new CTFs can be created for children born on or after 3 January 2011. Instead, Junior ISAs are available for these children. The annual limit for contribution to a CTF is increased to £3,840 from April 2014 (previously £3,720) rising to £4,000 from 1 July 2014,to match the contributions limit for Junior ISAs.

From April 2015 cash in a CTF can be transferred to a  Junior ISA [1]