Child Trust Funds – what you need to know

Posted on July 22, 2019

 The first of the children allocated with Child Trust Fund (CTF) accounts will begin to turn 18 from 1st September 2020.

Although this date seems a long way off, it’s a sensible idea to begin planning now.

Whether you’re a child soon to be turning 18 considering your options, or a parent trying to figure out what will happen next – keep reading for more information.

What is a Child Trust Fund?

Child Trust Funds were introduced by Gordon Brown and the Government in 2005. The tax-free savings product was available to children born between 1st September 2002 and 2nd January 2011.

They were implemented to encourage long-term saving and give all children a financial boost by the time they reach 18. The Government made an initial contribution of £250 or £50, depending on when the child became entitled.

The voucher enabled the parent/guardian of the child to choose a provider for their child’s CTF. If the voucher was not used before the expiry date then the Government allocated these accounts to various product providers, to ensure the child didn’t miss out on their policy.

Unsure where your CTF account is? Follow this link to find out.


How does a Child Trust Fund work?

A Child Trust Fund can be invested in cash, or in stocks and shares (like the accounts we hold).

The Government limits the amount that parents, family members and friends can pay in each year. This is currently £4,368 and the contribution year runs from birthday to birthday.

Child Trust Fund contributions run from birthday to birthday each year

Child Trust Fund contributions run from birthday to birthday each year

Why did they close?

Child Trust Funds were discontinued in January 2011 and replaced by the Junior ISA.

The main difference between a CTF and a Junior ISA account is that the Government do not make any kind of contribution towards Junior ISAs, meaning your child will only receive whatever money you save or invest for them.

In April 2015, the Government made it possible for people with a CTF account to transfer to a Junior ISA account.

Find out more about our Junior ISA here.

What happens when a child turns 16?

When a child with a CTF turns 16, they can take control of the fund by contacting the fund provider and becoming the registered contact.

Once they have contacted their fund provider, they can decide to change the investment type or switch providers.

If the child chooses not to manage the fund, they can leave their parent or guardian in charge until they turn 18, when they’ll be able to withdraw it.

OK, so what are my options when I turn 18?

  • You can withdraw the investment and use it as you wish
  • You can instruct your provider to move the fund to an adult ISA
  • Or, your CTF will automatically transfer to a matured Child Trust Fund account (currently under consultation with HMRC)

Whatever you decide to do, you will need to ensure you have an active bank account in your name so the payment can be made to you.


What should I do now?

  • Unsure where your Child Trust Fund is? Visit the HMRC website to find out
  • Interested in transferring your Child Trust Fund account to us? Simply fill in our Child Trust Fund transfer pack
  • Or transfer your Child Trust Fund into a Junior ISA – further information on our Junior ISA can be found here
  • More information can be found on our Adult ISA here

This blog provides generic information and opinions of the writer and should not be relied upon for making investment decisions. No advice has been provided by Sheffield Mutual. If you are in any doubt as to whether a savings or investment plan is suitable for you, you should consider contacting a financial adviser for advice. If you do not have a financial adviser, you can get details of local financial advisers by visiting or Advisers may charge for providing such advice and should confirm any costs beforehand. Any reference to taxation is based on the writer’s understanding of current tax legislation and practice, which could change in the future.

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By Laura

Twitter: @SheffieldMutual

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