More than 750,000 Child Trust Funds worth around £2,242 are sitting in accounts unclaimed.
New figures from HM Revenue and Customs (HMRC) suggest around three-quarters of a million young adults are sitting on unclaimed pots of cash, including over 27,000 living in Scotland. Some 758,000 18 to 23-year-olds have yet to claim their matured Child Trust Fund, worth £2,242 on average each.
The savings accounts are not held by the UK Government but in banks, building societies or other savings providers. The Share Foundation charity has helped 85,000 young people track down over £165m in lost Child Trust Funds and is the UK Government’s delivery partner for managing the savings scheme and Junior ISA accounts for young people in care.
It is now calling for the UK Government to introduce automatic release of HMRC-allocated Child Trust Fund money when recipients turn 21.
READ MORE: Young people urged to claim UK Government cash worth over £2,200READ MORE: New calls to stop HMRC income tax change due to start in April
Child Trust Funds are long term, tax-free savings accounts which were set up for children born between September 1, 2002 and January 2, 2011 with an initial UK Government deposit of at least £250.
Young people can take control of their account at 16, but once the account holder turns 18 it matures, and they can decide whether they want to withdraw the money or re-invest it.
Under the proposal, countersigned by former Minister Ruth Kelly and parliamentarians from both Houses, account providers would be required to close and pay out proceeds via UK Government National Insurance channels for all HMRC-allocated matured Child Trust Funds which remain unclaimed when their young owners reach their 21st birthday.
In Scotland, this would release just over £34m, two-thirds of which would benefit young adults from low-income backgrounds.
Gavin Oldham OBE, Chair of Trustees at The Share Foundation, said: “Child poverty remains a growing challenge across Scotland. Over the past 12 years, we’ve worked to tackle cycles of disadvantage by establishing starter capital accounts for young people in care and by helping those from low-income households access Child Trust Funds many didn’t even know existed.
“While there’s much more still to do, these steps offer a foundation of support at a time these families need it the most.”
The charity’s mission is to encourage and facilitate inter-generational rebalancing by providing young people from disadvantaged backgrounds with both material resources and life skills knowledge to achieve their potential in adult life.
The Share Foundation provides a free search service working directly with leading account providers via the Child trust Fund Register – locating 60 per cent of accounts within 24 hours.
The Share Foundation also delivers life-changing programmes for young people in care, with ‘earn as you learn’ incentives.
These include:
- Stepladder Plus – financial awareness for 15–17-year-olds with the ability for young people in care to earn up to £750
- Stepping Forward – an introduction to the performing arts for 13–17-year-olds, ability for young people in care to earn up to £200
Full details on these programmes can be found on the Share Foundation website.
How to find your Child Trust Fund
If teenagers or their parents and guardians already know who their Child Trust Fund provider is, they can contact them directly. This might be a bank, building society or other savings provider, alternatively, they can visit GOV.UK here and complete an online form to find out where their Child Trust Fund is held.
If a parent or guardian was not able to set up an account for their child, HMRC opened a savings account on the child’s behalf.
Ask HMRC to find a Child Trust Fund
You can ask HMRC to find a Child Trust Fund if you’re:
- a parent or guardian of a child under 18
- 16 or over and looking for your own Trust Fund
You can either:
- use the online form to ask HMRC where a Child Trust Fund is
- request the details by post
To use the online form you’ll need:
- your National Insurance number
- a Government Gateway user ID and password – if you do not have a user ID, you can create one the first time you sign in
You can also do it by post, full details are on the dedicated pages on GOV.UK here.
What else you should know
Teenagers aged 16 or over can take control of their own Child Trust Fund if they wish, although the funds can only be withdrawn once they turn 18-years-old. Where children have a Child Trust Fund, families can still pay in up to £9,000 a year tax-free. The account matures once the child turns 18 years old and no further money can be deposited.
They can either withdraw the funds from the matured Child Trust Fund account or reinvest it into another savings account. Until the child withdraws or transfers the money, it stays in an account that no-one else has access to.
The Child Trust Fund scheme closed in January 2011 and was replaced with Junior Individual Savings Accounts (ISA) – find out more about this here.
