HMRC has begun contacting individuals born before 2005 as part of a campaign that could result in people receiving an average of £2,200. The tax authority is reaching out to 21-year-olds in a new awareness drive focused on lost child trust funds (CTFs), which have an average balance of £2,200.
The Labour government's tax arm is contacting 21-year-olds, specifically those born before 2005, as part of an initiative to highlight unclaimed child trust funds. A CTF is a tax-free savings account established for children born between September 2002 and January 2011, originally introduced by former Labour Prime Minister Gordon Brown.
Launched in 2005, the scheme provided children with approximately £250 each from the government. Children from low-income families or those in local authority care may have received an additional £250. HMRC and Labour anticipated that parents would manage the funds and could contribute up to £9,000 annually.
If a parent did not open an account within 12 months of a child's birth, HMRC opened one on their behalf. Lucy Rigby, the City minister and economic secretary to the Treasury, stated: "Hundreds of thousands of young people in this country don't know they have a CTF, let alone how to access it. Some will have a couple of thousand pounds sat there that would really help them as they begin adult life."
These accounts are held at various banks and building societies across the country. Rigby recently met with representatives from the UK banking sector, including HSBC UK and Nationwide. Once the account holder turns 18, they can decide whether to withdraw the money or reinvest it.
Worryingly, more than 750,000 CTFs remain unclaimed, prompting HMRC to launch this campaign. The authority will initially write to all 21-year-olds with unclaimed accounts.
