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Is your child due a windfall?

girls appleIf your child turns 16 from 1 September this year, it’s likely they could be quids in as the first child trust funds (CTFs) mature.

CTFs were a government initiative to encourage long-term saving. Children born between 1 September 2002 and 1 January 2011 were given vouchers worth between £50 and £1,000 (it changed over time and was means-tested). These could then be invested in cash or the stock market via the CTF account.

My two kids both got these – did yours? Dear Daughter got £250 at birth and a £250 top-up at age seven. Darling Son however only got the £250 at birth because by then the additional payment had been stopped. The entire scheme was eventually scrapped and the Junior Isa (with similar rules but no free money) took its place.

In my own case, I transferred each CTF into a Junior Isa (Jisa). This was because the choice of providers (and potential returns) for the Jisa scheme was better. It’s a very simple process, you just select your Jisa firm, fill in their form with the details of your existing CTF and they do the rest. For more help, see our SMM guide to Jisas.

However, I know many parents haven’t done this or, worse, may have mislaid the paperwork due to house moves and so on. Over six million CTFs were issued, of which it’s estimated one million have lost contact with their rightful owners, says charity Shares4Schools.

It’s really worth dusting off the files because your child could now be sitting on hundreds of pounds in savings. Even if you never touched the voucher, the government opened the account and invested the money on your child’s behalf. Shares were the default option, which have done much better than cash over the long term.

You can find a lost CTF for free via HMRC’s website tool here. You will however need a Government Gateway ID number. This is the code you use to fill in self-assessment tax returns. If you don’t have one, you can get one using your national insurance number and other forms of ID.

Before you plan your shopping trip, remember that, while the child can manage the CTF from the age of 16, he or she cannot withdraw the money until the age of 18.

If you’ve got the time, it’s a great opportunity to get your child interested in their own investment and to have some practice running it. SMM has a beginner's guide to investing in funds (portfolios of shares run by professionals) here while Shares4Schools has a competition for sixth formers and some resources to help you here

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Thursday, 13 December 2018