HMRC Issues Alert Over Unclaimed Child Trust Funds Worth Thousands
HM Revenue and Customs (HMRC) has issued a significant warning to UK households, revealing that individuals born between specific years could be missing out on substantial sums of unclaimed cash. According to the tax authority, people born between September 1, 2002, and January 2, 2011, may have an average of £2,200 sitting in dormant Child Trust Fund (CTF) accounts, with many unaware of their existence.
What Is the Child Trust Fund?
The Child Trust Fund was launched in 2005 by then-Chancellor Gordon Brown under the Labour Government led by Tony Blair. This initiative aimed to ensure that young people had savings by the time they reached 18 and to educate them about investing. It was a long-term, tax-free savings account available to children born within the specified dates, meaning those affected today are roughly between 15 and 23 years old.
Initially, the Government sent vouchers to parents and guardians to set up accounts, but if no action was taken, accounts were automatically opened with an approved provider. As a result, approximately 6.3 million accounts were established, with each child receiving a £250 contribution from the Government. Children from low-income families or in local authority care received an additional £250, and some qualified for a further £250 payment after turning seven, depending on their birth date.
Current Status and Potential Windfalls
HMRC recently took to social media platform X, formerly Twitter, to highlight this issue, stating: "Your child could have an average of £2,200 sitting unclaimed. If your child has recently turned 18, they may have a Child Trust Fund waiting for them. Find out if they qualify." The Government reports that these accounts have grown to an average value of £2,242, though amounts vary widely. However, the latest figures suggest that around 758,000 young people could be missing out on accessing these funds.
There are three types of CTF accounts: stakeholder accounts, which make up the majority and involve initial stock market investments that shift to less risky options after age 13; cash accounts, similar to standard savings accounts; and investment-based accounts, which involve stocks, shares, and bonds for potentially higher returns but with greater risk. The latter two account types constitute approximately 17% and 4% of the total, respectively.
How to Claim and Additional Details
Parents and guardians can still contribute to existing CTF accounts, with current rules allowing up to £9,000 per year in additions. This alert serves as a crucial reminder for families to check if they or their children are eligible, as many accounts remain unclaimed due to lack of awareness. HMRC urges those born within the key dates to investigate their status to avoid missing out on these valuable savings.
