What Are Child Trust Funds?
Paul RyanChild Trust Funds (CTFs) were introduced in the UK in 2005 as a way to encourage parents to save for their children's futures. But what exactly are CTFs, and how do they work?
What is a Child Trust Fund?
A Child Trust Fund is a long-term savings account for children born between 1 September 2002 and 2 January 2011. The account is opened by the child's parent or guardian, and they can contribute up to a certain amount each year. The government also contributes an initial amount when the account is opened, and a further amount when the child turns seven.
How do Child Trust Funds work?
The money invested in a CTF is locked away until the child reaches 18, at which point they can use the funds for anything they like. The account can be managed by the parent or guardian until the child turns 16, at which point the child can take over management of the account if they wish. The account can also be transferred to another provider if the parent or guardian wishes to do so.
What are the benefits of a Child Trust Fund?
One of the main benefits of a CTF is that the account is tax-free, meaning that any interest or gains made on theinvestmentare not subject to tax. This can make a significant difference to the amount of money the account generates over time. Additionally, as the account is designed to be a long-term investment, it can be a good way for parents to save for their child's future, whether that's for university fees or a first home.
Are Child Trust Funds still available?
Child Trust Funds are no longer available to new applicants, having been replaced by Junior ISAs (JISAs) in 2011. However, existing CTFs can still be managed, and any child who was eligible for a CTF can still open a JISA.
In conclusion, Child Trust Funds were a valuable savings option for parents looking to invest in their child's future. While they are no longer available to new applicants, existing accounts can still be managed, and the tax-free benefits of the account make it an attractive investment option for many families.
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