A child is eligible for the CTF as long as:
The account can only be opened in the name of a child by a person with parental responsibility for the child. Only one CTF account can be held per child.
An adult opening a CTF account on behalf of a child will become the account's 'Registered Contact'. Once the child reaches 16, any existing 'Registered Contact' on the account can no longer act and the child must apply to become the 'Registered Contact'.
Up to £1,200 of voluntary contributions can be paid into the CTF account in any account year. This is in addition to the initial Government endowment of at least £250 (or £500 for children in families receiving full Child Tax Credit or equivalent benefits as specified by HM Revenue & Customs) and any further Government payment, which the child may receive. Payments can be made in sterling by anyone - parents, family members, friends and the child for whom the account is opened.
If the £1,200 limit is not reached in any account year, any shortfall cannot be carried forward to subsequent years.
An account year runs for 12 months starting on the child’s birthday and ending on the day before the child's next birthday. The first account year starts on the date the account is opened and ends on the day before the child’s next birthday. It may, therefore, be less than 12 complete months.
Money paid into a CTF account is a gift to the child and is 'locked in'. This means that it can only be accessed by the child when they reach 18. Contributions made to a CTF account cannot be returned to the contributor and no person can make withdrawals on the child's behalf.
No withdrawals are allowed until the child’s 18th birthday, when the account will cease to be a CTF account. The only exception to this is if, sadly, the child dies or is diagnosed with a terminal illness and a claim made on behalf of the child is accepted by HM Revenue & Customs.
Any income earned is free of income or capital gains tax, under current legislation. However, this favourable tax treatment may change in the future.
Normally, if parents make a gift into their child’s savings account that results in more than £100 a year income for the child (for example, interest on a building society account), the parent is taxed on that amount at their highest rate of income tax. With the CTF, this does not currently apply.
If the voucher is not used to open a CTF account before its expiry date, HM Revenue & Customs will open a Stakeholder CTF Account on behalf of the child with a provider of its choice. The voucher will not be valid after this time.
Transferring to another provider or between account types
The CTF account can be transferred to another provider or to a different type of CTF account at any time. However, a child can only have one type of account with any one provider. Transfer will be free of charge or expense except in certain cases connected with the disposal or acquisition of investments.
Further information on the CTF
For more details about the CTF scheme, please contact us on 0845 1200 100 or visit any of our branches or agencies.
In addition, the following HM Revenue & Customs resources are available:
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