HM Revenue & Customs has issued an urgent alert to hundreds of thousands of UK residents who may be unaware they have significant savings waiting to be claimed. According to the latest figures, approximately 758,000 individuals could be entitled to an average of £2,242 from long-forgotten government-created accounts.
Who Is Eligible for This Hidden Savings Boost?
The potential windfall relates to Child Trust Funds (CTFs), which were established under the previous Labour government as long-term, tax-free savings accounts specifically designed for children. The scheme was operational for children born between September 1, 2002, and January 2, 2011, meaning those currently aged between 15 and 23 years old are most likely to have these accounts in their name.
How Child Trust Funds Were Established
When the scheme was active, the government automatically set up these accounts for eligible children, providing an initial deposit of between £250 and £500 directly into each fund. There were additional opportunities for further contributions when children reached seven years of age, and parents were also encouraged to add their own savings to boost the funds.
Investment platform AJ Bell has highlighted a crucial detail that explains why so many people remain unaware of these accounts: more than a quarter of all CTFs were established directly by the government, rather than by parents or guardians. This means hundreds of thousands of young adults may have never been informed about these savings vehicles that have been quietly growing in their name.
Current Value and Account Management
Latest statistics from HMRC reveal that these accounts have matured significantly, now holding an average value of £2,242 per account. The funds continue to grow tax-free, with no income tax or capital gains tax payable on any profits generated within the account.
Young people gain control of their accounts at age 16, though they cannot withdraw the funds until they reach 18. Once they take control, they can continue contributing up to £9,000 annually to their existing CTF if they wish to maintain this tax-efficient savings vehicle.
Important Changes Since 2011
The Child Trust Fund scheme officially closed to new applicants in 2011, replaced by the Junior ISA system. It's important to note that you cannot hold both a Child Trust Fund and a Junior ISA simultaneously. If you wish to open a Junior ISA, you must request your provider to transfer any existing CTF balance into the new account.
How to Locate Your Potential Savings
HMRC has streamlined the process for checking whether you have an unclaimed Child Trust Fund. According to their guidance, it takes approximately just five minutes to submit an inquiry using their dedicated online tool. You'll need only the young person's National Insurance number and date of birth to initiate the search.
The revenue service typically responds within about three weeks with confirmation of whether an account exists and details of its current value. This straightforward process means thousands could quickly discover they have substantial savings they never knew existed.
Additional Benefits and Considerations
Beyond the financial value, these accounts offer several advantages:
- No impact on benefits: The funds do not affect eligibility for any state benefits
- Complete tax efficiency: All growth within the account remains entirely tax-free
- Flexible management: Account holders can choose to maintain or transfer their funds
With the youngest eligible account holders now approaching adulthood, HMRC's alert serves as a timely reminder for an entire generation to check whether they have unclaimed savings that could provide a valuable financial foundation as they enter independent adult life.
