Child Trust Funds were introduced back in 2002 and all children born in the UK from September of that year until the end of December 2010 were given a gift of £500, which was invested into one of three Child Trust Fund (CTF) products.
- A savings account
- An account based on investment in shares
- Stakeholder CTF
These options were laid out clearly showing the levels of risk and returns, the charges involved and what types of stock market investments would be made.
In addition to the initial deposit, the attraction of the CTF was that deposits could be made throughout the life of the CTF (up to £4,000 each year) and once the child is 16, they will manage their own CTF. However, they cannot spend or reinvest any of the money until they are 18 years old. Whilst payments into the CTF are not tax free, they do not qualify for capital gains or income tax.
From 6th April 2015, all of the 6 million children with CTFs are now free to contribute to a Junior ISA, either alongside their CTF or to transfer their CTF over to a Junior ISA. The person registered on the child’s CTF will needs to make the request to transfer the CTF.
Junior ISAs offer much improved rates and returns and lower charges too. In the tax year you transfer the CTF to a Junior ISA, this sum is not included in the £4,080 allowance you have in each year either, so this will not affect any existing payments into the Junior ISA.
If you are not sure where or whom your child’s trust fund is set up with, there is a form you can use to find it. You can find it here and if you would like some advice about the implications of moving a CTF and the benefits of a Junior ISA, please do get in touch with us.
You can call 020 7636 9094, email email@example.com or complete our Free Online Enquiry [http://www.berley.co.uk/contact/] and we’ll be in touch soon.