Services for Young Children

Child Trust Fund

On 24 May 2010 the Government announced that it intended to reduce and then stop Government payments to Child Trust Fund accounts. The changes require legislation to be passed by Parliament.

Starting payments

Parents currently receive a £250 voucher from the Government to start a Child Trust Fund account for their child. If the child is from a lower income family the Government then pays an additional £250 into the account. Under the proposals the voucher and additional payment will, for children born between August and December 2010, each have a value of £50. Children born from January 2011 onwards will not qualify for a Child Trust Fund account.

When a child reaches age 7

The Government currently pays £250 into a Child Trust Fund account when a child reaches age 7. Children from lower income families also receive an additional £250. Under the proposals children whose 7th birthday is after 31 July 2010 will not qualify for these payments.

Where a child is disabled

From April 2010, children entitled to Disability Living Allowance (DLA) receive annual payments of either £100 or £200 dependent on the care component of their DLA award. Under the proposals no payments will be made into Child Trust Funds for DLA entitlement of any kind in the tax year 2011/12 onwards.

Children in local authority care

Where children in the care of local authorities do not have a Child Trust Fund the Government opens an account for them with a payment of £500. It is proposed that, for children going into local authority care after 31 July 2010 this payment will become £100. Children going into care from January 2011 onwards will not qualify for a Child Trust Fund account.

What happens if I have got a Child Trust Fund voucher but have not used it?

You can still use the voucher up to its expiry date to open a Child Trust Fund for your child. If you fail to do so then HM Revenue & Customs will open an account on your child’s behalf. The account will receive Government payment at the level that applied when they first had Child Benefit paid for them – this is the amount shown on the voucher you received.

What will happen to Child Trust Fund accounts after December 2010?

Children born after December 2010 will not be eligible for a Child Trust Fund. But accounts set up for eligible children will continue to benefit from tax free investment growth and no withdrawals will be possible until the child reaches age 18. The child, friends and family will continue to be able to contribute up to an overall total of £1,200 a year, and it will still be possible to change the type of account and/or move it to another provider.

Further information about Child Trust Funds