Child Trust Fund Turning 18: What to Do With the Money in 2026

Quick answer

If you were born between 1 September 2002 and 2 January 2011, a Child Trust Fund was opened in your name by the government. Hundreds of thousands of these accounts matured in recent years, with more maturing throughout 2026. The average account holds roughly £2,200 — but many hold significantly more. The most important thing to know: you can transfer your CTF directly to an ISA without it counting towards your annual £20,000 ISA allowance. This guide explains every option, step by step.

Part 1: What was the Child Trust Fund?

The Child Trust Fund (CTF) scheme ran from 2005 to 2011. It was a government initiative to give every child born in the UK a financial start in life, funded by the taxpayer.

How it worked

When a child was born, the government issued a voucher worth:

• £250 for most families
• £500 for families receiving Child Tax Credit at the full rate (lower income households)

A second voucher of the same value was issued when the child reached age 7. Parents had up to one year to open a CTF account with a registered provider and deposit the voucher. If they did not do so, HMRC opened a "Revenue-allocated" account automatically.

Parents, grandparents, and other family members could make additional contributions to the account. The annual contribution limit was £9,000 per year (rising over time). Many families made no additional contributions; others paid in regularly, resulting in much larger pots.

When did the scheme close?

The CTF scheme was closed to new accounts in January 2011, replaced by the Junior ISA. Existing accounts remained open and continued to grow. The first accounts began maturing in September 2020 (when children born in September 2002 turned 18), and accounts continue maturing throughout the 2020s.

Who managed the money?

CTF accounts were offered by banks, building societies, insurance companies, and investment providers. Common providers included Foresters Financial, OneFamily, HSBC, Yorkshire Building Society, and The Share Centre.

Most families ended up in a Stakeholder CTF — the default option. These were required by regulation to:

• Cap charges at 1.5% per year
• Invest in a diversified fund (usually a FTSE All-Share tracker)
• Automatically switch to lower-risk investments as the child approached 18 (lifestyling)

Part 2: What might your account be worth?

HMRC data shows the average CTF balance at maturity is approximately £2,200. This figure reflects the initial government vouchers plus investment growth, with no additional contributions. Accounts that received regular top-ups from family members can be worth considerably more.

Illustrative growth scenarios

Assume an initial government contribution of £500 (vouchers at birth and age 7) and a FTSE All-Share tracker returning 6% per year (a reasonable long-run average after charges for a Stakeholder account):

• £500 invested at birth (2003), grown at 6% for 18 years: approximately £1,428
• £500 invested at age 7 (2010), grown at 6% for 11 years: approximately £950
• Combined: approximately £2,378

This aligns with the HMRC average. If your family added even small regular amounts — say £20 per month — the balance would be significantly higher.

To find the exact value, you need to trace your account and log in with your provider (see Part 3 below).

Part 3: How to find a lost Child Trust Fund

A large number of CTF accounts are "lost" — the young adult doesn't know who the provider is, and the account may have been opened at an address they no longer live at. HMRC estimates hundreds of thousands of accounts remain unclaimed.

Step-by-step trace

Step 1: Go to gov.uk/child-trust-funds and use the online form to ask HMRC which provider holds your account. You'll need to log in with a Government Gateway account (or create one — free, takes about 5 minutes).

Step 2: Alternatively, call the HMRC CTF helpline on 0300 123 4500. They can search by National Insurance number and date of birth.

Step 3: HMRC will write to you (or send a secure message via Government Gateway) confirming the provider's name.

Step 4: Contact the provider directly with your details. They will ask for proof of identity — typically a passport or driving licence. If you are still under 18 and your parents are the registered contacts, they can assist.

Step 5: Once you have verified your identity with the provider, you can see your balance, choose what to do with the funds, and action a transfer or withdrawal.

The entire process typically takes 2–4 weeks if done by post, or faster if the provider offers online identity verification.

Part 4: Your options at 18 — the four paths

When your CTF matures (the day you turn 18), you have four main options. None of them are urgent — your money sits safely in a protected account if you take no immediate action — but acting promptly means your money can start working harder for you.

Option 1: Transfer to an ISA (usually the best choice)

You can transfer your entire CTF balance to an Individual Savings Account (ISA) without it counting against your £20,000 annual ISA allowance. This is a genuinely exceptional feature.

How the exemption works: Normally, you can shelter a maximum of £20,000 per year in an ISA. The CTF-to-ISA transfer is treated as a separate, additional allowance. In the tax year your CTF matures, you could:

• Transfer £5,000 CTF → ISA (exempt from the £20,000 limit)
• Plus contribute a fresh £20,000 to the same or a different ISA
• Total tax-sheltered in one year: £25,000

This is a one-time opportunity. Once you withdraw the CTF money, it loses its sheltered status. Transferring directly from CTF to ISA is the most tax-efficient option for almost everyone.

Which ISA?

• Cash ISA: Safe, no investment risk, but returns typically lag inflation over the long term. Suitable if you need the money within 5 years.
• Stocks and Shares ISA: Invested in funds or shares. Higher potential returns over the long term, but value can fall in the short term. Suitable for money you won't need for at least 5–10 years.

Illustration of long-term growth: £5,000 transferred to a Stocks and Shares ISA, invested in a global tracker fund averaging 7% per year, over 40 years grows to approximately £74,872. The entire gain is free of capital gains tax and income tax within the ISA.

Option 2: Transfer to a Lifetime ISA (if eligible)

If you are aged 18–39 and do not already own a home, a Lifetime ISA (LISA) offers a 25% government bonus on contributions up to £4,000 per year — a bonus of up to £1,000 per year.

The LISA is ideal if you plan to buy your first home within the next few years (property price up to £450,000). The government bonus is applied automatically by your LISA provider.

Important restriction: You can only withdraw from a LISA without penalty to buy a first home, or from age 60. Any other withdrawal incurs a 25% penalty — which claws back the bonus and some of your own money. Do not use a LISA for money you might need in an emergency.

Option 3: Keep with your CTF provider

When your CTF matures, most providers automatically move the balance into a savings account in your name. The money is accessible at any time, earns modest interest, and remains safe. This is the path of least resistance, but the interest rate may be low.

If you choose this option, check the interest rate and compare it with easy-access savings accounts elsewhere. You are free to transfer to a better provider at any time.

Option 4: Withdraw to your bank account

You can simply ask the provider to transfer the money to your bank account. This is the most flexible option — you can use the money immediately for education, a car, a deposit, or any other purpose.

Tax point: All growth inside a CTF is free of capital gains tax — it has been accumulating tax-free. Once withdrawn to a bank account, the original amount and all past gains are yours with no tax to pay. However, if you then reinvest the money in a normal (non-ISA) account or investments, future gains on that reinvested money will be subject to the standard CGT rules. This is why transferring to an ISA rather than withdrawing is generally preferable — it keeps future growth tax-free.

Part 5: Tax implications — what you need to know

Inside the CTF (before maturity)

All gains, dividends, and interest inside a CTF are tax-free — no income tax, no capital gains tax, regardless of how large the fund grows.

At maturity — the withdrawal

When your CTF matures and you withdraw to a bank account, there is no tax to pay on the withdrawal. The money is yours free and clear. You do not need to declare it on a tax return.

After withdrawal — reinvested money

If you withdraw and then invest outside an ISA, future gains and income on those investments are subject to normal tax rules:

• CGT on gains above the annual exempt amount (£3,000 in 2026/27)
• Income tax on dividends and interest above respective allowances

This is why the direct CTF-to-ISA transfer is so valuable: it preserves the tax-free environment permanently.

Does the CTF count as income for Universal Credit?

No. A CTF account balance does not count as income. However, capital above £6,000 does affect Universal Credit eligibility (above £16,000, UC stops entirely). If you are receiving UC, withdrawing a large CTF pot to a current account could affect your entitlement — a transfer to a Stocks and Shares ISA avoids this issue, as ISA savings are disregarded for UC purposes.

Part 6: Real numbers — what could you do with £2,200?

Depending on your situation at 18, the CTF money could serve different purposes:

The right answer depends entirely on your financial situation, existing savings, and plans for the next 5–10 years. However, the universal advice is: do not leave it in a low-interest protected account by default. Take 30 minutes to compare your options and act.

Frequently asked questions

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