Glossary · UK
What is Child Trust Fund?
A tax-free long-term savings account set up for UK children born between 1 September 2002 and 2 January 2011, now closed to new accounts and largely superseded by Junior ISAs, maturing when the child turns 18.
Full Definition
A Child Trust Fund (CTF) was a tax-free savings and investment account automatically set up by the government for every child born in the UK between 1 September 2002 and 2 January 2011, seeded with an initial government contribution (typically £250, or £500 for lower-income families), with family and friends able to add up to an annual limit thereafter. No new Child Trust Funds have been opened since the scheme closed to new entrants on 2 January 2011, when it was replaced by the Junior ISA, but millions of existing CTF accounts remain open and continue to grow tax-free until the child's 18th birthday. Like a Junior ISA, all growth and income within a Child Trust Fund is free of Income Tax and Capital Gains Tax, and the money legally belongs to the child, becoming accessible to them (rather than their parents) once they turn 18, at which point they can withdraw it or roll it into an adult ISA. Many CTF holders and their families lost track of the accounts over the years, particularly where they were opened by the government on a child's behalf because a parent did not choose a provider, so HMRC provides an online tool to help young adults trace a lost Child Trust Fund. Since 6 April 2015, it has been possible to transfer the full balance of a Child Trust Fund into a Junior ISA, which some families choose to do to access a wider range of investment options or lower charges.