The much heralded Child Trust Fund (CTF) has had its regulatory rules finally resolved by the industry regulator the Financial Services Authority (FSA).
The new CTF, technically a tax efficient savings plan for children, will start in April 2005. All children born on or after 1 September 2002 will have a plan opened for them with a gift from the Government of at least £250.
In addition, there will be further gifts from the Government in later years as well as tax incentives for relatives to save in the plan for children. The catch is that only the child can withdraw any money and only when they reach 18.
The CTF is the latest Government incentive to encourage a habit of regular savings. The FSA has finally completed its rules for sales literature and quotation illustrations.
Our view
£250 in one hand and taken away with huge university fee hikes for students in the other. Great savings plan idea but there are already many tax efficient savings schemes.
They are changing the wrapper but the same results will be delivered.