More than 750,000 young adults missing out on thousands – here’s how to check and claim
More than 750,000 young adults are missing out on an average of £2,242 in money that is easy to claim, the government has warned.
New findings from HMRC reveal 758,000 people have not yet claimed their child trust fund account savings and are missing out on a major cash boost.
These funds are long-term, tax-free savings created for each child born between September 1, 2002 and January 2, 2011. The government invested £250 each; those in low-income families or local authority care received an additional £250.
Young people can take control of this account at the age of 16 and withdraw money when they turn 18. With interest, many become much more valuable than when they were founded.
The child’s parent or guardian can also pay up to £9,000 a year into the account. Many still do this but new accounts cannot be created. Children’s trust funds were introduced by Labor under Tony Blair in 2005 and abolished by the Conservatives in 2011.
Hope Kerr-Williams, a 22-year-old apprentice from Nottingham, took advantage of the children’s trust fund at the age of 18. He said he learned about the account when he was a teenager and that when he bought it it was worth £5,000.
“When I was planning to move to Sheffield, I was counting the days until I could claim my child trust fund,” Ms Kerr-Williams said. “I used this to put a deposit on my flat, pay the first month’s rent and buy supplies for my accommodation; it all adds up when you have to buy everything at once. I also bought a laptop for my course.
“Having my child’s trust fund account saved me from going into overdrafts or borrowing at the beginning of college when I had a lot of expenses. It gave me independence and a great start for adult life, which I’m still grateful for.”
Child trust funds have now been replaced by small individual savings accounts (ISAs), which are long-term, tax-free savings accounts for children. These accounts work similarly, the only difference is that the government does not issue any money when they are established.
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Capital is at risk.
Terms and conditions apply.
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How can you check and claim your child’s trust fund?
For those looking to check and claim child trust funding, HMRC has published guidance for those who may have lost their funding. The most common reasons for this are that they or their custodians lose track of it or forget that it was set up.
The department also advises against the use of third-party agencies that offer to find child trust funds at a certain price. In extreme cases, they have been known to charge £350 for this, or even 25 per cent of the account value.
Instead, the tax office advises young people to search ‘find your child’s trust fund’ on Gov.uk or use The Share Foundation’s free, approved tool, which requires just a few details. It is then easy to claim and access the account.
There are several options for what to do with funds once they are accessed. Charlene Young, pensions and savings expert at AJ Bell, said: “Once you find the money you can choose what to do with it. Your options are to transfer it into an adult ISA or withdraw the money.
“Until then, your money will remain in an account that no one else can access and will likely incur very high fees.
“Anything you transfer to an adult ISA at maturity will not count towards your annual ISA allowance, which is £20,000 for over 18s.”
