Thousands of young people could get more than £2,000 in new HMRC trust fund drive
Thousands of young people will be reunited with cash worth an average of £2,200 as HMRC announces action on forgotten children’s trust funds.
These funds are long-term, tax-free savings created for each child born between September 1, 2002 and January 2, 2011. The government deposited £250 into each account; 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.
Two-thirds of the six million children’s trust fund recipients are now over 18, meaning they need to be able to access their accounts. But an estimated 750,000 young adults have yet to claim their funds, with £1.5bn still sitting in accounts, according to recently revealed HMRC data.
The government has responded to calls to help young people find their missing funds by writing to all 21-year-olds with an unclaimed account as part of a new awareness campaign.
Treasury Economic Secretary Lucy Rigby said: “Hundreds of thousands of young people in this country don’t even know they have a child trust fund, let alone how to access it. Some will have a few thousand pounds sitting there that will really help them as they start their adult lives.”
“Together, we will ensure young people can access funds from these children’s trust funds to help them get the best start in adult life.”
Gavin Oldham, chief executive of the Share Foundation, a charity that helps people connect with children’s trust funds, welcomed the move but said the government “needs to go much further”.
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Capital is at risk.
Terms and conditions apply.
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Earlier this month the organization called on the government to automatically release funds in HMRC accounts to owners when they turn 21; It was a move that could instantly give young people up to £286 million.
Child trust funds have now been replaced by small individual savings accounts (Isas), which are long-term, tax-free savings accounts for children.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 contribute anything when they are established.
The tax office’s official guidance says the most common reason for child trust funds to go missing is because claimants or their executors lose track of the fund or forget it was set up.
It adds that every young person receives a national insurance notice before their 16th birthday with information on how to find child trust funds.
The Department 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 only a few details. It is then easy to claim and access the account.
