CTF holders may be able to switch funds for a better deal

The Treasury has hinted that six million Child Trust Fund holders may soon be able to  switch their savings to much better deals.

Around 6.3 million children aged between two and 11 are earning pitifully low rates of interest or are stuck in expensive funds because they were given child trust funds by the Government. 

These accounts have been scrapped and replaced with Junior ISAs, which offer much better rates. However, families with a child trust fund are not allowed to open a Junior ISA.   But this week, Whitehall officials indicated this could happen.

A spokesperson for the Treasury said:

 ‘We believe that children who have a child trust fund and are therefore ineligible to open a Junior ISA or transfer their funds to one should not be excluded from the Junior ISA market if their long-term interests would be better served there.

‘Following an announcement in the Budget, the Government has consulted on the position of child trust funds, looking at the possibility of transferring from them to Junior ISAs. A response to the consultation will be published in due course.’ 

It’s hoped the Chancellor will make an announcement in his autumn statement on December 4.

Child trust funds were given to every child born between September 1st  2002, and January 2nd 2011. The £250 cheque from the government could be invested in a selection of cash savings accounts or funds. Families could save up to £3,720 a year tax-free in the accounts.

But after the banking crisis, the hand-outs became an expense the country could no longer afford. Trust funds were scrapped and replaced with Junior Isas for under-18s.

Children with one of these new accounts, which work in a similar way to the adult ISA, can choose between 2,000 funds and some of the best interest rates on the High Street.

However, youngsters with child trust funds are not allowed to open a Junior ISA. And child trust funds and the savings deals they are in have been getting progressively worse.

  • Date posted:
  • Share:

View all articles

knowledgeable & able to explain the options available to me in a language I could understand

Nigel, Corby Glen

has an uncanny skill of identifying exactly what you need and explaining it in a manner that is clear, concise and understandable

David, Langham

extremely professional, thorough and very honest with his advice

Damian, Corby

© 2020 Arcus Taxation Accountants is the trading name of Arcus Associates Ltd. Registered in England & Wales Company No. 05065405.

privacy / cookies

website cms powered by csb internet

01572 770552