STAKEHOLDER SAVING
Child Trust Fund
Frequently asked questions
- What is the Child Trust Fund (CTF)?
- What is a Stakeholder Saving CTF?
- Where can I open a Stakeholder CTF?
- Can I open more than one Stakeholder Saving CTF in my child’s name?
- How will the Stakeholder Saving CTF be invested?
- Could the fund lose money?
- What are the charges?
- Can I take payment breaks?
- What can a Stakeholder Saving CTF be used for?
- Can you tell me more about the Government voucher?
- I’m expecting a baby, can I apply now?
- Who can open a CTF account?
- Will there be any other Government payments?
- How much can I put in each year?
- Do I have to pay tax on it?
- Is the money mine or my child’s?
- Can I take out the money I have put in if I need it?
- I’ve heard the Government may top up the Stakeholder Saving CTF when the child is 7, and at secondary school. Is this true?
- What will happen if I forget to use the CTF voucher?
- Will the money in my child’s CTF affect family benefits?
- I have older children. What about them?
What is the Child Trust Fund (CTF)?
The Government has introduced the Child Trust Fund to help you save for your child’s future.
The CTF is a new type of long-term savings and investment account for children born on or after 1st September 2002, who qualify for child benefit.
There are three main types of CTF account: the stakeholder account, non-stakeholder savings accounts and non-stakeholder shares accounts.
The Government will issue a £250 voucher to you, as long as you qualify, to kick-start your child’s CTF account.
What is a Stakeholder Saving CTF?
Stakeholder accounts invest in shares in companies and the Government has made certain rules for these accounts to reduce the risk of investing in shares.
The main rules are that:
- Risk is spread — because the money in the account is invested in shares spread across a range of companies.
- Maximum charges of 1.5% — of the value of the account per year.
- CTF providers have to start moving the money to lower risk investments once your child is 13.
- All providers must accept a minimum payment of £10 into the account — but they can accept less if they wish.
This is the account that will be opened for your child if you don’t use the CTF voucher yourself (you have 12 months to use the voucher).
Read more about stakeholder CTF ››
Where can I open a Stakeholder CTF?
All CTF providers have to make available a Stakeholder CTF account.
Can I open more than one Stakeholder Saving CTF in my child’s name?
No. Each child can only have one CTF account.
How will the Stakeholder Saving CTF be invested?
Stakeholder Saving accounts invest your child’s money in shares in companies.
Your child’s money is not put into just one company, as they could lose out if that company does badly. Instead, it is invested in a number of companies in order to reduce risk.
Could the fund lose money?
Remember, shares can fall in value as well as rise.
When investing money for a long time, accounts that invest in shares almost always produce a better return than cash savings accounts. In fact, this has been the case for every 18 year period in the last 40 years.
However, you must remember that although investments in shares have performed well in the past, it doesn’t mean that they will always do so in future. The Government has made certain rules for stakeholder accounts to reduce the risk of investing in shares.
What are the charges?
The charge on the Stakeholder Saving CTF account is limited to no more than 1.5% a year of the value of the fund - which means that the charge can be no more than £1.50 for every £100 in the account.
Can I take payment breaks?
There is no requirement to make regular payments. You can pay £10 at any one time into a CTF stakeholder account and many providers choose to accept smaller payments.
What can a Stakeholder Saving CTF be used for?
At 18, young people with CTF accounts will be able to decide for themselves how best to use the money.
They can choose to carry on saving or use the money for other things. Driving lessons, computer equipment and training courses are just a few examples of what they could put the money towards.
Can you tell me more about the Government voucher?
If your child was born on or after 1st September 2002 , you'll get a £250 voucher from the Government to set up a Child Trust Fund account after you have started receiving Child Benefit.
I’m expecting a baby, can I apply now?
There is no application or form to fill in for the CTF so you don’t need to do anything until after your baby is born. You do have to claim Child Benefit and once you do that, you should get the CTF voucher about a month later.
Of course, you could always research now which CTF account to open for your child.
Who can open a CTF account?
Although the money in the account belongs to the child, only a parent (if 16 or over) or someone else with parental responsibility for the child (a legal term meaning someone with the rights and duties of a parent) can open a CTF account.
Will there be any other Government payments?
If you have a finalised award of Child Tax Credit (CTC) for the date you first received Child Benefit for your child, and the household income is at or below £13, 910 (the CTC limit in 2005-06) your child will get an additional £250. This will be paid directly into your child’s account.
Your child will receive a further payment when they turn seven. The exact amount will be announced closer to that time. Again, children who are part of a lower income household will receive more.
How much can I put in each year?
The maximum that can be put into the account each year is £1,200. The Government payments do not count towards this limit.
Anyone can put money into the account including your family, friends and in time your child, as they grow older.
Do I have to pay tax on it?
No. Neither you nor your child will pay tax on any interest or gains made on the money in a CTF account.
Is the money mine or my child’s?
All the money in the CTF account belongs to your child and your child alone. Once they turn 16, children will manage their CTF accounts themselves.
Can I take out the money I have put in if I need it?
No. The money in the CTF account belongs to your child. Only your child can withdraw money from the account. But it cannot be taken out until they turn 18. Once 18, they can decide how best to use their money.
I’ve heard the Government may top up the Stakeholder Saving CTF when the child is 7, and at secondary school. Is this true?
Your child will receive a further payment from the Government when they turn seven, with children in lower income families receiving an extra payment. The exact amount will be decided nearer to that time. The Government will make these payments into children’s CTF accounts and write to the person managing the account to let them know.
The Government is considering whether any further payments should be made when children are at secondary school but this decision has not been taken yet.
What will happen if I forget to use the CTF voucher?
The sooner you open an account, the sooner it begins to grow. Once a voucher has been issued there is a twelve month window in which you can open a CTF account for your child. If you don’t do this, HM Revenue & Customs (HMRC) will open a Stakeholder Saving CTF account in your child's name with a Child Trust Fund provider.
HMRC will send you the details of the account they have opened. It’s then up to you to manage it. You can change this account or provider if you wish, but it would be best for your child if you choose the account yourself before the voucher expires.
Will the money in my child’s CTF affect family benefits?
No. If you are eligible for family benefits or tax credits, you will continue to receive them.
The Department for Work and Pensions has more information about services and benefits for people with children ››
I have older children. What about them?
Children born before 1st September 2002 don’t qualify for the £250 voucher, but there are many other savings and investment accounts for children.
Interested a in Stakeholder Saving Child Trust Fund?
