Child Trust Funds were introduced in 2002 by the government ostensibly as a way to encourage long term saving for children. Parents or guardians of children born between September 2002 and January 2011 were provided with a voucher worth £250 (or more if they were in receipt of child tax credits).
As many as 900,000 Child Trust accounts are unclaimed. One of the reasons for this many of these accounts were set up automatically by the government and the accounts may no longer be linked to the current address.
If your children fit the age range above and you are unsure about your children’s Child Trust Fund accounts, then you can check on HMRC’s site “Where’s my Child Trust Fund” as this provides an online tool to enable you to check whether or not your child does have an account.
If they do, consider switching their Child Trust Fund account to a Junior ISA.
The option to switch Child Trust accounts into Junior Isa’s only came into effect last year.
Both Child Trust Funds and Junior Isa’s are tax free accounts and both allow contributions of £4080 per year per child.
Junior ISA’s have many more investment options and lower fees!
If you wish to put regular monies aside for your children, then the Junior ISA would seem to be ideal. You may of course want to gift larger lump sums to our children, to help them up the property ladder or to get started in business. This is where you need to take special care as there may be a downside to your generosity, I have pointed out some of the pitfalls in a previous blog.