The article below is reproduced in full from a Press Release shared by HM Revenue & Customs on September 18. To see the original version go to https://www.gov.uk/government/news/almost-430000-young-people-urged-to-claim-their-cash .
According to a Press Release from HM Revenue & Customs, hundreds of thousands of young adults could have an average of £2,000 waiting for them in their unclaimed Child Trust Fund account. The press release continues as follows:
Almost 430,000 18-21 year olds with an unclaimed Child Trust Fund, worth an average of £2,000, are being urged by HM Revenue and Customs (HMRC) to claim their cash as part of UK Savings Week (18 to 24 September 2023).
Child Trust Funds are long-term, tax-free savings accounts and were set up for every child born between 1 September 2002 and 2 January 2011, with the government contributing an initial deposit of at least £250. Funds can be withdrawn once the account matures when the child turns 18.
A recent student survey, conducted by UCAS, asked first and second year university students about Child Trust Funds and the results showed that they were most interested to know how much money was in their account (43%) and how to claim it (32%). The survey also revealed 60% of students got their information about Child Trust Funds from their parents.
Young adults and parents can search on GOV.UK to find out where their Child Trust Fund account is held.
Angela MacDonald, HMRC’s Second Permanent Secretary and Deputy Chief Executive, said:
Many 18-21 year olds are starting out in first jobs or apprenticeships, starting university or moving into their first home and their Child Trust Fund is a pot of money with their name on. I would encourage young people to use the online tool to track it down or, for parents of teenagers, to speak to them to ensure they’re aware of their Child Trust Fund. It could make a real difference to their future plans.
There are currently 5.3 million open Child Trust Fund accounts. Young people aged 16 or over can take control of their own Child Trust Fund, although the funds can only be withdrawn once they turn 18. More than 500,000 matured Child Trust Fund accounts have been claimed or transferred into an ISA since the oldest children on the scheme turned 18 in September 2020.
Families can continue to pay up to £9,000 a year tax-free into a Child Trust Fund until the account matures. The money stays in the account until the child withdraws or reinvests it into another account.
The UCAS survey revealed that 74% of respondents were aware of Child Trust Funds.
Further findings include:
- more men (75%) were aware of Child Trust Funds compared to 73% of women
- 78% of 19 year olds were aware of Child Trust funds compared to 71% of 20 to 21 years olds
- of the people who had not yet claimed their Child Trust Fund, 76% of respondents were likely to take steps to learn more about how to withdraw it.
Sharon Davies, CEO of Young Enterprise, said:
We would encourage all young people to investigate if they have money which is unclaimed in a Child Trust Fund and to use it wisely. A disproportionate amount of the money is unclaimed by young people from disadvantaged backgrounds who are the very people who would benefit most from these funds. The investment could be placed into an adult ISA or put towards driving lessons, education or starting a business.
The money in a Child Trust Fund has the potential to be life changing and the lack of knowledge about them shows the importance of financial education and financial planning from a young age.
The government is offering help for households. Check GOV.UK to find out what cost of living support you could be eligible for.
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Further information
More information on Child Trust Funds and how to access the money can be found on GOV.UK.
Latest figures for Child Trust Funds were released on 22 June 2023 and include figures up to April 2022.
The Child Trust Fund scheme closed in January 2011 and was replaced with Junior Individual Savings Accounts (ISA).
If a parent or guardian was not able to set up an account for their child, the government opened a savings account on the child’s behalf.
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.
UCAS surveyed 1,130 first and second year students in the UK between 6 and 20 July 2023. The survey was conducted on behalf of HMRC.
Young Enterprise is a national charity who specialise in Enterprise Education and Financial Education and are a trusted and valued provider of knowledge, resources and training to anyone teaching young people how to manage money. Young Enterprise works directly with young people, teachers, and volunteers, with the support of corporate partners, to build a successful and sustainable future for all young people.
Young Enterprise’s vision is to ensure that every young person is provided with the opportunity to learn the vital skills needed to earn and look after their money. Any investment to improve young people’s financial literacy not only pays huge dividends to their lives, but their families, their communities and to wider society.
Young Enterprise is partnering with Wealthify to launch free tools for teachers, designed specifically for young people to understand Child Trust Funds, and how they could make best use of them for their future.