In an urgent message to the public, HM Revenue and Customs (HMRC) has revealed that many young adults could be missing out on a significant financial boost this festive season, with unclaimed Child Trust Fund accounts averaging around £2,000 each.
Last year, approximately 430,000 individuals aged between 18 and 21 were reportedly unaware of their unclaimed funds.
Act Now for a Festive Financial Boost
In a recent post on social media platform X, HMRC urged those who have reached adulthood in the past few years to take action:
“Unlock a boost this Christmas by cashing in your #ChildTrustFund. If you’ve turned 18 in the past few years, then you could be missing out on a cash boost. You could cash in up to £2,200 this Christmas from your Child Trust Fund.”
Overview of the Child Trust Fund Scheme
The Child Trust Fund (CTF) was introduced as a long-term tax-free savings account for children born between 1 September 2002 and 2 January 2011. Although the scheme closed in 2011, it remains pertinent for young people today. Those aged 16 and above can take control of their accounts, with withdrawals permitted from the age of 18.
Currently, there are 5.3 million active Child Trust Fund accounts in existence. Since the first recipients turned 18 in September 2020, over half a million accounts have either been claimed or converted into Individual Savings Accounts (ISAs)
Contribution Rules and Access Rights for Child Trust Funds
Parents and guardians can still contribute, with annual limits capped at £9,000. Importantly, the funds are securely held for the child and become accessible only upon reaching the age of majority. Control of the account is granted at 16, but access to the funds remains restricted until the individual turns 18.
Main points about contributions and access include:
- Annual Contribution Limit: £9,000
- Account Control: Granted at age 16
- Withdrawal Age: Funds can be accessed at age 18
Tax Benefits and Access Information for Child Trust Funds
The income generated from a Child Trust Fund, along with its profits, is tax-free and does not affect any benefits or tax credits the account holder may receive. For more information on how to access these funds, individuals are encouraged to visit the official GOV.UK website.
Accessing Government-Established This Christmas
If a parent or guardian was unable to establish a Child Trust Fund for their child, the government automatically opened a savings account on the child’s behalf. Young adults who are aware of their Child Trust Fund provider can contact them directly to initiate the process of accessing their funds.
HMRC‘s call to action serves as a timely reminder for many young adults to unlock their potential financial windfall this Christmas.
