FAQs
- What is a Child Trust Fund?
- Who can open an account?
- How much can I pay in on top of the £250?
- Can family and friends contribute to the account?
- How will I know if my child qualifies?
- How much will the initial government contribution be?
- Do I need to have received my voucher before I apply?
- What happens if I don't use the voucher?
- Will the Government choose the best place to invest for my child?
- When can my child have the money?
- What can the money be used for?
- Will the Child Trust Fund affect any benefits the family receives?
- How can I keep track of these accounts?
- How is my child's Child Trust Fund invested?
- How do I pay into my child’s trust fund account?
- How much should I pay in?
What is a Child Trust Fund?
A Child Trust Fund (or CTF) is a savings and investment account available to children born on or after 1st September 2002 who qualify for child benefit. Child Trust Funds were introduced by the Government. Each eligible child receives a voucher for £250. If you are eligible for full Child Tax Credit your child will receive a further government payment into their Child Trust Fund of £250. The first Child Trust Funds were opened in April 2005. All children will receive another government contribution of at least £250 round about their seventh birthday.
Who can open an account?
The voucher will be sent to the person who is claiming Child Benefit. To apply for a Child Trust Fund you must be over 16 and the 'responsible person' for the child you are applying for.
The 'responsible person' is someone who is aged 16 or over and who has parental responsibility for the child. Under general law, parents who are married to each other will each have parental responsibility. Where parents are not married, the mother will automatically have parental responsibility as will the father if he is registered on the birth certificate; or parents agree by means of a parental responsibility agreement; or a court so orders. Other individuals who may have parental responsibility include adoptive parents, a step parent under a parental responsibility agreement, testamentary or special guardians, and a person with whom a child is living under a residence order.
How much can I pay in on top of the £250?
Each child's Child trust Fund account can have up to £1,200 in total added to it each year, and there is no tax payable on the growth in the account.
Can family and friends contribute to the account?
Yes, any friend or family member can contribute to your child's account. Up to £1,200 a year may be added in total, and any growth in the account will be tax-free. What's more, a Child Trust Fund could be a great way to promote a lifetime savings habit in your child. When they are old enough, they can even add to their own account from money they are given as gifts, or that they might earn
in part-time work.
How will I know if my child qualifies?
If you are eligible for Child Benefit for your child, you will automatically be sent a voucher which enables you to open a Child Trust Fund account. Even if you move abroad, the account will remain open, but won't be eligible for any future government contributions.
How much will the initial government contribution be?
Each qualifying child will receive £250 from the Government. This amount will rise to £500 for children of families who receive full Child Tax Credit.
Do I need to have received my child's voucher before I apply?
No, even if you haven't received the voucher yet, you can still apply for an ASDA Child Trust Fund. Everything will be set up in advance, ready for when your child's voucher arrives.
What happens if I don't use the voucher?
If you don't use your child's voucher to open an account with a provider of your choice within 12 months of receiving it, the Government will open an account for your child with one of the approved providers on their list.
Will the Government choose the best place to invest for my child?
No. They will simply choose the next name on the list of approved providers, working in strict rotation. Where your child's account ends up will depend on whose name is next on the list. To make sure the Child Trust Fund is set up with the provider of your choice you must act within 12 months of receiving your child's voucher.
When can my child have the money?
When your child reaches the age of 18 they will have access to the money. The Children's Mutual will contact your child to explain their options before their 18th birthday.
What can the money be used for?
Your child can spend the money however they want - to help with university fees, travelling, a car, or even a deposit on their first home. There are no restrictions, though you may want to encourage your child to use their Child Trust Fund payout wisely.
Will the Child Trust Fund affect any benefits the family receives?
No. A Child Trust Fund will not affect any benefits.
How can I keep track of the account?
A statement will be sent each year at around the time of your child's birthday, showing how much has been paid into the Child Trust Fund account, and its current value. This will help you keep track of any payments made, and check on the account's progress.
How is my child's Child Trust Fund invested?
With the ASDA Child Trust Fund, the money in your child's account is invested with the aim of getting a good return on the investment, while managing the risks involved. Until the child is 13, the investment is linked to company shares, which have historically produced better long-term returns than cash (but past performance is not a guide to the future). Once the child reaches 13, The Children's Mutual will start to switch investments into lower-risk assets such as government bonds or cash.
How do I pay into my child’s Child Trust Fund account?
You can make a one-off payment of at least £10 at any time. If you do this online you can use a debit card. You can also set up a regular payment by Direct Debit online. Details about other ways to pay are on the 'Why save' page.
- The Childrens Mutual
- Child Trust Fund
- Apply online now for an ASDA Child Trust Fund from ASDA Financial Services
- Request a Pack
- For questions or quotes please call 0845 900 0950
