Children Trust Funds – Full UK Guide in 2020, Compare Providers, Banks and More!

By | Last Updated: 14th September 2019 | This post may contain Affiliate Links

Thinking about a Child Trust Fund in the United Kingdom? They were initially introduced by the UK Labour government in 2002, intended to inspire children to save money.

In recent years they’ve been REPLACED by Junior ISAs, however if you opened an account before they were changed, you can continue saving as normal until the child is 18 years old. From April 2015 anyone with money in a UK child trust fund can transfer it to a Junior ISA.

Child trust funds were typically ‘open’ to any kid who was born before 1st of September 2002 to the 2nd of January 2011. As a tax-free saving account, the idea was that every child could ‘arrive’ to adulthood with some form of savings behind them.

How does a Child Trust Fund Work?

Normally HMRC (HM Revenue and Customs) will send the legal guardians or parents of the child a starting payment voucher, this tended to be £50 or £250. The voucher was in the child’s name and was used to ‘set up’ the account.

The fund had three different types of accounts, these were share, stakeholder and savings account. They all offered slightly different conditions, but each one was designed so the child didn’t have to pay gains or income tax on any ‘profit’ the account made.

Parents, family members and friends could between them pay in up to £4,128 each year, with the child’s birthday considered the start of the year. Money in the fund belonged to the child in question and was ‘locked’, this means it wasn’t accessible for money to be withdrawn until they were 18 years old. Equally the fund also didn’t go against the parents or legal guardian, if they received state benefits or tax credits.

It was estimated that if £20 went into the account each month, by the age of 18, the child could have over £4,000 in savings. If the parent deposited the maximum amount each year, the child could have had access to more than £60,000 by 18.

As the Child Trust Fund has been REPLACED by Junior ISAs, please visit our ISA deals page to find out how to transfer or open an account. Our team are regularly updating this website with special offers and deals from UK banks and building societies!

Frequently Asked Questions

Can you get a UK Child Trust Fund?
If you’re apply today the answer is NO, they were officially closed in 2011. The UK government introduced the Junior ISA as a replacement.

How much interest does a Child Trust Fund earn?
This varied depending on the general interest rates at the time, usually they were linked and not a fixed-rate.

Can I transfer a Child Trust Fund to an ISA?
Yes you can, if you’re child is still under 18 years old, you can transfer the CTF to a Junior ISA account. Please visit our ISA deals page for further information and latest offers.