Are you one of the missing 2 million?

Were you born in the UK between 1st September 2002 and 2^nd January 2011? If not, do you know anybody who was?

Back in September 2002, the Government wanted to encourage people to save from an early age so they created the Child Trust Fund (CTF) account.

• Any income or gains arising within the account is completely tax free.
• It was available to all children born in the UK whose parents were awarded child benefit. The government, to get things moving, in the child’s first year contributed £250 into the account. At the age of 7, the Government topped up the CTF by a further £250. In the case of a child born into a low-income family the Government paid in £500 on each occasion.
• Parents, family members and friends can top up the CTF each year up to a maximum amount (£9000 for the 2020/21 tax year).
• Although the child can take control of the CTF at the age of 16 they cannot access it until the age of 18.

It is estimated around 55,000 people in the UK on average reach the age of 18 every month. The first tranche of young people who could access the CTF was from September 2020.

Approximately 4.5 million CTFs were set up by parents and guardians and around 1.8 million were created automatically by the UK tax authorities at the time because parents had failed to do so or the child was in local authority care.

It is believed that around 2 million eligible young people are unaware of the existence of their CTF account. Are you one of those 2 million? Or do you know anybody who was born within that time period?

Assuming no additional contributions were added to the CTF over the years, the educated view is that it might be worth around £1,400 or more now.

If the CTF provider (usually a bank or building society) does not hear from the 18 year old then they will transfer the monies into a ‘protected’ tax free account until they do so.

If the individual’s birth fell between the aforementioned dates and they have reached the age of 16 (the age they can take control of the account but not access it), how can that person find out about their CTF account?

• They can do so by accessing the Government Gateway Services. If the person has not already set up a Government Gateway account, they will need to do that first. Once the individual has gained access, they will then require either their CTF unique reference number or National Insurance number. HMRC should contact them within 3 weeks to provide the person with details of the CTF provider to contact.
• If individual concerned was in local authority care then they should contact The Share Foundation charity who oversee these CTFs. The charity can furnish them with the necessary information.

There is a danger that millions of young people who have just, or are about to, reach the age of 18, could miss out on a small/medium or large windfall at a time, dependent on their circumstances, when they need it most.

If you are one of those young eligible people, have you thought what you want to do with this newly acquired capital sum? Are you going to simply spend it? Or will you use it as a deposit for a house/flat or invest in say a lifetime ISA for a future house purchase? Or will you want to use it to start up a business? Or look longer term by investing into a pension? The options are endless.

If you would like to talk to someone regarding those options then please do not hesitate to contact us. Where investment advice is required, we can bring in an IFA qualified to offer that particular piece of advice.