20 September 2021

  • News

Child Trust Funds...what you need to know

The first of the children allocated with Child Trust Fund (CTF) accounts started to mature in September 2020.

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 £9,000 and the contribution year runs from birthday to birthday.

Our Child Trust Fund is a stakeholder account, the money is invested in a fund linked to stock market performance. As with all stock market investments the value may fall as well as rise and you may get back less than has been paid in. Tax treatment depends on individual circumstances and may be subject to change in the future.

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?

  • Continue to enjoy tax-free returns, with access to your money when it is needed, by investing all or part of the funds into an adult Investment ISA

  • Withdraw the whole amount

  • Transfer your money to another provider

  • If you don’t want to decide straight away, you can keep the funds in the matured account until you’re ready to make a decision. However, if you choose this option, no further payments can be made into the account

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

 Tax treatment depends on individual circumstances and may be subject to change in the future.

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 www.unbiased.co.uk or www.vouchedfor.co.uk. Advisers may charge for providing such advice and should confirm any costs beforehand. 

By Laura Staniland


Senior Marketing and Communications Specialist

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