Your Questions Answered:

Will the CTF be tax-free?

Children will not be taxed on the income and gains they make on the investments in their Child Trust Fund account or the matured funds, but there will be no tax relief for contributions made to a CTF account. The government has also decided that current rules which limit parental gifts to a child will not apply to CTFs.

Can parents contribute to the CTF?

The CTF can be topped up by family and friends of the child, and the children themselves when older. Additional contributions of up to £1,200 a year between them. In addition to this, the government has promised that it will make a second and final payment into all CTFs when children reach the age of seven.

If I don't pay in the full £1,200 in one year, can I pay in more the following year?

No, there is no chance to carry-over any entitlement.

I've heard about backdated payments - how do these work?

The Treasury will backdate all payments to cover newborns from September 2002. Vouchers and information will be sent to parents or children born between September 2002 and April 2005 when Child Trust Funds were launched.

These vouchers will have a higher value, recognising that for these children there will be less time for their CTF to grow in value before maturity. Interest will also be added by the government. If your baby was born between September 2002 and April 2003, its fund will be worth £277 or £553 next April. Babies born between April 2003 and April 2004 get £268 or £536 respectively while those born between April 2004 and April 2005 will get £256 or £512. Children born before September 2002 get nothing.

Where can I open a CTF account?

There are dozens of providers, including banks and building societies, friendly societies, some fund management companies, brokers and independent financial advisers. (see the table below)

How will we keep track of the CTF's value?

Your account provider will issue an annual statement.

What happens if I forget to open the CTF account?

Vouchers do have expiry dates, written on the back. You are supposed to open a CTF account before that date. To ensure no child loses out, if an account has not been opened within one year of the issue of the voucher the Inland Revenue will open a stakeholder account for the child. The parent is free to assume responsibility for that account later at any time, if they wish.

What happens if I don't get the voucher I'm entitled to?

Call the CTF helpline between 8am and 8pm on 0845 302 1470. Or write to: Child Trust Fund Office, Waterview Park, Mandarin Way, Washington, NE38 8QG

Can I access the money in an emergency?

No - the only two grounds for accessing a CTF account is in the event of a child's death or diagnosis of terminal illness. There are special procedures in place for this.

I have older children who do not qualify - how can I save for them?

There are other savings products available, some of them tax-free ones like ISAs and Friendly society savings schemes, that you can save into separately on behalf of children who were born before September 2002.

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