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Contents

1. What is the Child Trust Fund?
2. Who is Eligible?
3. How Does the Child Trust Fund Work and how Much is it Worth?
4. Can Additional Payments be Made?
5. Who can Access the Money in the Child Trust Fund?
6. Exceptions
7. Child Trust Fund and Looked After Children
8. Roles and Responsibilities of Local Authority
9. Parental Responsibility

1. What is the Child Trust Fund?

The child trust fund is a savings and investment account designed to give children born on or after 1st September 2002 a financial start in life and to help teach them the value of saving.

All children born after 1st September 2002 who live in the UK are entitled to this account including children in care.

To ensure that an account is open for all children being looked after, a monthly return will be required from all local authorities from April 2005.

2. Who is Eligible?

Children born on or after September 2002 are eligible for the child trust fund if child benefit has been awarded for them, they live in the UK and they are not subject to immigration restrictions.

There are special rules for looked after children (see Section 7, Child Trust Fund and Looked After Children).

3. How Does the Child Trust Fund Work and how Much is it Worth?

For children born on or after 1 September 2002, a voucher worth £250 will be sent to the child benefit claimant. A person with Parental Responsibility for the child can then open a child trust fund account for that child with an approved CTF provider, e.g. bank, building society etc.

If after a year, no one has opened an account, the Inland Revenue will open an account for the child.

A further voucher for £250 will be paid to the person with Parental Responsibility on a child's 7th birthday.

For children on low incomes and children in care, £500 is paid on each occasion.

4. Can Additional Payments be Made?

Anyone can contribute to a child's trust fund up to the sum of £1200 per year.

5. Who can Access the Money in the Child Trust Fund?

Only the child can withdraw money from the fund when he or she reaches 18.  No one else can touch it.

The money belongs solely to the child despite the fact that the person with Parental Responsibility manages the money until the child reaches 16.  Young people aged 16 and over can take over the management but cannot make withdrawals until they are 18.

6. Exceptions

In the case of terminally ill children, the person with Parental Responsibility can request permission to withdraw funds.

7. Child Trust Fund and Looked After Children

There are special rules for looked after children as child benefit is not payable to them whilst they are looked after. If a child benefit award is made for a child before he or she comes into care, s/he is eligible for the fund account in the usual way.

Where a child comes into care soon after birth, the Inland Revenue will open a child trust fund account for the child.

Even when the local authority has Parental Responsibility under a Care Order, they are not entitled to open or manage a child trust fund account.  Where possible, the looked after child’s parents must be encouraged and helped to take on this responsibility.

8. Roles and Responsibilities of Local Authority

Local authorities must provide the following information about children who are Looked After to the Inland Revenue to ensure they receive their child trust fund account by:

1. Informing them of all children looked after on 6 April 2005 and born on or after 1 September 2002.
2. Completing forms for all children who come into the above groups as they will get additional payments in lieu of interest for late payments
3. Providing a monthly return of all new admissions between 6 April and 5 May and so on throughout the year
4. Clarifying those situations where there are concerns about the capability/ appropriateness of the person with parental responsibility.
5. Ensuring parents know they are entitled to the money if their child dies or is terminally ill

9. Parental Responsibility

The child’s parent is deemed eligible to manage the Child Trust Fund except in the following circumstances:

• Where the child lives permanently away from the parent with no face to face contact (including children whose plan is for adoption);
• Where there is a court order terminating their contact with the child;
• Where the parent is deemed to have significant mental health problems
• Where the child is lost and abandoned and where there is no prospect for reunification

NB In all cases where the decision is to exclude, legal advice must be sought

End