The Child Trust Fund Scheme

In April 2005, the Government introduced the Child Trust Fund which gives every child born between 1 September 2002 and 1 January 2011 a financial head start  - a lump sum payment when they reach 18.

Under the savings scheme, each eligible child receives a voucher from the Government to invest in a Child Trust Fund.

Until August 2010, the Government will be making further contributions into your child's Child Trust Fund when they turn seven, starting from 1 September 2009 onwards. This is worth an extra £250 (or £500 for children in lower income families).

Government Announcement on Child Trust Funds

In June this year the Government announced its intentions to reduce and then eventually stop Government payments into Child Trust Fund accounts.

• What are the Governments changes to the Child Trust Fund?
  
  The Government will:
  
  
  • Reduce Government contributions for children born from August 2010:
    - from £250 to £50 for children in better off families
    - from a total of £500 to £100 for children in lower income families
  • Stop Government contributions at age 7, from 1 August 2010
  • Stop HMRC issuing new Child Trust Fund vouchers from 1 January 2011 (vouchers issued before this date will remain valid)

• How will these changes affect me?
  
  This means that:
  
  
  • Vouchers will continue to be issued for parents to open Child Trust Fund accounts for their children
  • Vouchers already issued will continue to be valid up to their expiry date
  • HMRC will continue to open Child Trust Fund accounts for children where the voucher has not been used by its expiry date
  • Government contributions into Child Trust Fund accounts will continue to be made at current levels and will reduce from August 2010 as detailed above
  • Child Trust Fund accounts already in existence will continue as usual
    - In place until the child's 18th birthday, with no withdrawals permitted
    - They will continue to benefit from tax efficient investment growth
    - Friends and family will be able to contribute up to a total of £1,200 a year

• What happens to Child Trust Fund accounts after 31 December 2010?
  
  Children born after 31 December 2010 will not be eligible to open a Child Trust Fund account. 
  
  Accounts already set up for eligible children will continue to benefit from tax efficient investment growth and no withdrawals will be possible until the child reaches 18 years old. 
  
  The child's friends and family will still 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.

For more information please visit the Government's Child Trust Fund Website.

Child Trust Fund Overview

Can my child have a Child Trust Fund?	Your child is eligible for a Child Trust Fund account as long as: Your child was born on or after 1 September 2002 and before 1st January 2011 Your child lives in the UK You receive UK Child Benefit for your child and Your child is not subject to immigration control Children born between 1 September 2002 and 5 April 2005 had to be living in the UK on or after 6 April 2005 to be entitled to the Child Trust Fund. If your child was born before 1 September 2002 please see our Child Tax Exempt Savings Plan to give them a financial head start too.
How much can I put in?	The Government will give you the first savings voucher. You can then pay in up to £1,200 each year. If you want to pay in more than £1,200 per year, our Child Tax Exempt Savings Plan can be taken out as well as a Child Trust Fund to further maximise the child's savings.
Who can make contributions into the Child Trust Fund?	Family, friends, godparents - and anyone else who wishes to - can contribute to the Child Trust Fund.  For example, as a birthday or Christmas gift for the child.
Can I have access to the money?	No. All the money in the Child Trust Fund belongs to your child and is locked in until they reach 18.
Do I have control over the money?	Until your child reaches 16 you can choose the investments held in the Child Trust Fund. From 16, your child can control the investment decisions if they wish to.
Are there any restrictions on how the money can be spent?	No. The money belongs to your child and at 18 they are entitled to spend it how they wish.
What about tax?	Neither you nor your child have to pay income tax or capital gains tax on returns from the Child Trust Fund.
Can I put the plan in trust?	No.
Can I switch providers?	Yes. Transferring an existing Child Trust Fund is a simple process, which we can manage on your behalf. Please contact us for more information.

The exact amount of money that you get back from your Ethical Child Trust Fund cannot be predicted as this will depend on the length of time you save for.   The addition of bonuses is not guaranteed and, therefore, it is possible that the Ethical Child Trust Fund might not receive any annual and/or final bonus.

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