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Louise Jarvill, tax specialist, explains Child Trust Funds - an easy way to give children a kick-start in life

As part of a new government campaign, teenagers and young adults will soon be taught essential money management skills. This comes following recent research by the Personal Finance Education Group (PFEG) that found 9 in 10 teenagers say they worry about money and spending and 66% think about money everyday.

Naturally, parents want to help give their children the skills they need to manage their personal finances. They may also want to set aside some money that can be used to fund driving lessons, gap years or even a kick-start to help saving for more adult purchases such their first house. The Child Trust Fund (CTF) is just one method of achieving these aims.

What is a Child Trust Fund?

  • The CTF is a government initiative to encourage parents to set up a saving plan for their children.
  • The account will be in your child’s name and only your child can access it. Your child will only be able to withdraw the money when they turn 18. The money cannot be taken out of the account until this time. 
  • At the age 16, your child is able to take over the management of their CTF. 
  • The government contributes a minimum of £500 to your CTF with greater contributions being made for lower income families.
  • Neither you nor your child will pay tax on any income or gains arising from the account.
  • Each year you can contribute a maximum of £1,200 to the account.

How do I set up a Child Trust Fund?

  •  If you have registered to receive child benefit and your child was born on or after 1 September 2002 you should receive a CTF voucher worth £250 automatically.
  • The voucher expires after a year, at which time HMRC will open a stakeholder account on the child’s behalf.  
  • Choose from one of three types of account; savings, investment or stakeholder. Different accounts will suit people’s different attitudes towards risk verses reward.  
  • At the age of seven, a further £250 will be paid into the account by the government.

How do I choose my Child Trust Fund account?

It’s a good idea to look at a number of CTF accounts before deciding where to open your child’s account.

Consider what fees there may be for running the account and the likely return on your investments.

  • Savings accounts: your money is secure and interest is earned on the value of your account. 
  • Investment accounts: your child’s money is invested in shares which means the value of your account may go up or down. There is usually a charge for these types of accounts depending on the value held in them.
  • Stakeholder accounts: your child’s money is invested in shares but certain rules set by the government need to be followed for these accounts. These rules aim to reduce the risk of investing in shares.

At any time you can move the account to a different provider or change the type of account. In order to decide the best account and provider for your child’s CTF, the Child Trust Fund website has an account chooser tool.

For general information, the Financial Services Authority is also a helpful resource.


Since the initiative’s conception, just 75% of the issued vouchers have been used by parents to open a CTF for their child.

Based on a savings CTF account with an interest rate of 3.5%, and assuming the maximum contribution is made annually, the CTF could be worth £28,550.00* by the time your child reaches age 18. *Calculated using the CTF calculator:


The Child Trust Fund website:
The Investment Management Association’s Guide for CTF:
Financial Services Authority: