Child Taxation: 7. Child Trust Fund
Published / Last Updated on 05/08/2021
The Child Trust Fund started on 6th April 2005 and was available for children born between September 2002 and January 2011.
Every child at birth during that period received government vouchers of £250 and for low income family children £500. Then, at age 7 they received a further government voucher of £250 and for low income family children £500.
In addition, parents and other relatives could pay in up to the annual maximum savings threshold of £1,200.
The Child Trust fund was replaced by Junior ISAs in November 2011. Junior ISAs were launched with an initial yearly savings limit of £3,600 and Child Trust Funds reflected this with the limit increased to £3,600 pa and has been increasing gradually each year since then, in line with increases in Junior ISA limits.
The current Junior ISA annual savings limit is £9,000 pa as is the Child Trust Fund limit. The Junior ISA limits run from tax year to tax year whereas the Child Trust Fund limits start on the child's birthday and end on the day before their next birthday.
Child Trust Funds grow tax free and many are still open today. Parents do have the choice if they wish, to convert the Child Trust Fund to a Junior ISA. Many have done so as there is a much greater choice in both cash and stock Junior ISAs whereas Child Trust Funds tend to be cash investment only with only a few equity based ones still open with many providers having already converted to Junior ISAs. To transfer to a Child Trust Fund to a Junior ISA you will need the child’s Unique Tax Reference number (UTR), open the Junior ISA an then transfer the Child Trust Fund to it.
The child trust fund can only be accessed at age 18.
