A recent report has highlighted the high number and value of Child Trust Funds (CTFs) left untouched by their now adult owners. 

The National Audit Office (NAO) recently issued the results of an investigation into CTFs. They were a subject well suited to the NAO, which is charged with examining how efficiently government money is spent. In the case of CTFs, over £2 billion was paid into accounts for 6.3 million children born between 1 September 2002 and 2 January 2011. Most children received one payment of around £250 each (£500 for those in low income families) from the government at the time their account was set up. With few exceptions, any other input to the CTF was privately funded, typically from parents. Between 2005 and 2010, just over a third of CTFs received such top-ups.

Regulations on Child Trust Funds

CTFs were initially designed to mature on a child’s 18^th birthday. However, shortly before the first accounts matured in 2020, regulations were introduced to allow the matured CTFs to retain their favoured tax treatment until the (adult) child decided to withdraw or transfer their funds. It is as well this action was taken as the latest HMRC data (to 5 April 2021) shows that:

• 175,000 18-year-olds had withdrawn or re-invested the funds from their matured CTF account; but
• 145,000 (45% of the total) had not claimed their matured accounts.

The report revealed that £394 million was sitting in the unclaimed accounts, an average of £2,717 for each CTF. A more recent estimate from the Investing and Saving Alliance suggested that, by August 2022, 27% of CTFs that had matured at least one year earlier remained unclaimed. That figure is eerily close to the 28% share of CTFs that were set up in default by HMRC because the child’s parent or guardian had taken no action in the 12 months after receiving an initial CTF voucher.

Trace your lost Child Trust Funds

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