• Our services
• Investing for your children
• Child Trust Funds
• More info about CTFs
• Which CTF is best for us?
• Open account

More info about CTFs

Helping you put money aside for your children in a
tax-efficient way

Child Trust Funds are a Government initiative designed to help you put money aside for your children. The money in the CTF is released on the child's 18th birthday to give them a head start in adult life.

The Government has introduced three main types of account, one based on cash investment and two on stock market-based growth.

Which children are eligible?

The Government currently provides vouchers to children born in the United Kingdom from 1st September 2002 ; This process is automatic and you do not need to apply for your vouchers after the birth of your child.

If you would like to invest for older children who did not qualify because they were born before 1st September 2002, please use our Junior Investment Account.

How much can be contributed?

Up to £1,200 a year (between the child's birthdays) can be invested into a CTF account in addition to the voucher from the Government.

Once contributed, money belongs to the child and cannot be returned to the donor. It is locked in (except as permitted by CTF regulations) until age 18 when the child decides how to use it.

You needn't worry if the total contributions in one year exceed the maximum allowable; we'll automatically put the excess into a separate 'holding' account ready to add to the CTF after your child's next birthday. Please note that money in the 'holding' account belongs to the child and is subject to the same restrictions on withdrawals as apply to the Child Trust Fund account. A liability to Income Tax may arise on money in a 'holding' account.

How do I open a Child Trust Fund account?

If you are the person claiming Child Benefit for the child, it's you who'll receive the information and voucher from the Government. You can then use your voucher to open an account. Technically, a CTF account can only be opened by a parent (or someone with 'parental responsibility'). Under the CTF regulations, this person becomes known as the 'registered contact'.

You can choose where to invest your voucher from a list of HM Revenue & Customs-authorised providers that includes The Share Centre. Naturally, as our passion is making the stock market accessible to everyone, we hope you'll choose us. In which case you just send us your voucher with a completed application form.

Like all CTF providers, we have to hold on to your application for 14 days (the 'cancellation period') before we can actually open your account. Once it's open, we can claim the value of your voucher from the Government and invest it for you.

Once your account is up and running, you'll receive annual statements from us, around the time of your child's birthday. You can also view your child's CTF and its value through your own secure online account on this website.

If you don't choose a provider for your child's CTF within 12 months, the HM Revenue & Customs will select one for you.

How might it grow?

Let's say you invest a maximum of £100 per month over the full 18 years, and the return achieved is 7% per annum including re-invested income.

Your starting £250, (if this is the amount of your voucher) plus the money you contribute over this time would total £21,850.

At 7% return per annum, the value of the CTF at age 18 would be £41,860 (before inflation), giving tax-free growth of over £20,000.

On the same basis, if you saved £50 per month, your child's CTF would be worth £21,300 (before inflation) at age 18.

If you don't add to your CTF, the HM Revenue & Customs calculates that if you simply invest the £250 initial sum and it grows by 7% per annum over the 18 years, then it would be worth £456, after taking into account an inflation rate of 2.5%. In other words, to really make the most of your child's Fund, you should take maximum advantage of the opportunity to add up to £1,200 a year.

(These figures are taken from the HM Revenue & Customs' 'Detailed Proposal for the Child Trust Fund' released 28/10/03. The 7% growth rate is an illustration only and actual returns will vary.)

Of course, these returns are for illustration only, the actual returns will vary as the value of investments, and the income from them, can go down as well as up. Also remember that past performance is no guarantee of future performance, but for growth over a period of 18 years, stock market investment is generally held to be the most appropriate. That's why the Government has set stock market investments as the basis for the Stakeholder account (with certain specific requirements to ensure that the risk profile remains appropriate).

What are the tax breaks?

As with any other stock market investment, dividends are taxed at source with the Child Trust Fund, but there's no Capital Gains Tax and no further income tax to pay. This applies both to the parent and the child.

What if I have more questions?

If there's anything you feel we've left unanswered, or if you have any questions about completing your application, please call us on 01296 41 45 41 and we'll be happy to help. Lines are open from 08:00 to 18:00 Monday to Friday.

Once your account is up and running we'll confirm receipt of your initial Government contribution and provide everything you need to help you monitor and manage your child's CTF.

01296 41 41 41