As part of UK Savings Week (18 to 24 September 2023), HM Revenue and Customs (HMRC) is encouraging those aged 18-21 who have an unclaimed child trust fund to claim their money.
The average value of an unclaimed child trust fund is £2,000 with an estimated 430,000 young people potentially eligible to claim.
Child trust funds were introduced for babies born between 1 September 2002 and 2 January 2011 in which the government provided an initial deposit of £250 or more.
Angela MacDonald, HMRC’s Second Permanent Secretary and Deputy Chief Executive, said:
“Many 18-21 year olds are starting out in first jobs or apprenticeships, starting university or moving into their first home and their Child Trust Fund is a pot of money with their name on. I would encourage young people to use the online tool to track it down or, for parents of teenagers, to speak to them to ensure they’re aware of their Child Trust Fund. It could make a real difference to their future plans.”
Currently around 5.3million child trust fund accounts are still open with the scheme stopping and being replaced with junior individual savings accounts (ISA) in January 2011.
A maximum of £9,000 can be deposited into a child trust fund annually without having to pay income tax. These funds will remain in the account until the beneficiary decides to withdraw or reinvest them into another account.
Child trust funds UCAS survey results
In July 2023 UCAS surveyed 1130 undergraduate students in Britain on behalf of HMRC. The survey was taken by both first and second year students.
In the UCAS survey of first and second year university students, 43% expressed the most interest in learning the amount of money in their child trust funds account, while 32% wanted to know how to claim it.
The survey also showed that 60% of the students got their information about the funds from their parents.
Since the oldest participants in the scheme have become 18 in September 2020 over 500,000 matured child trust fund accounts have either been withdrawn or moved into an ISA.
How do find I my Child Trust Fund?
It’s important to know that if a parent or guardian was not able to set up an account for their child the government automatically opened a savings account on a child’s behalf.
The trust funds are exempt from income tax and accessible when the child reaches the age of 18.
Parents and young adults can use GOV.UK to identify the provider that holds their child trust fund account.
Sharon Davies, CEO of Young Enterprise, said:
“We would encourage all young people to investigate if they have money which is unclaimed in a Child Trust Fund and to use it wisely. A disproportionate amount of the money is unclaimed by young people from disadvantaged backgrounds who are the very people who would benefit most from these funds. The investment could be placed into an adult ISA or put towards driving lessons, education or starting a business.
The money in a Child Trust Fund has the potential to be life changing and the lack of knowledge about them shows the importance of financial education and financial planning from a young age.”
Teaching young people about money
The money from a child trust fund can be very influential and this highlights the need for young people to be educated in financial planning at an early age.
Young Enterprise is a well regarded national charitable organisation that focuses on providing education in the areas of enterprise and finance.
They are known for their expertise and are highly valued as a source of information, materials, and training for individuals teaching young people about money management.
Young Enterprise collaborates directly with young individuals, educators, and volunteers, while also receiving support from corporate partners, all with the shared goal of creating a prosperous and sustainable future for young people.
You can find out more about Young Enterprise and how to donate here.
