Child Trust Funds

On the 6 April 2005 the Government launched the Child Trust Fund which will provide each child born after 1 September 2002 with an initial endowment of £250. The Government have done this as a commitment to give every child a financial head start in life and to teach children the value of saving as well as providing them with a financial buffer and generate some of the assets they may need to take advantage of as young adults.

The Government is also planning to link the Child Trust Fund with the school curriculum, to take full advantage of the learning opportunities the scheme provides.

A number of providers will be offering products suitable for Child Trust Fund investment. Every provider will have to offer the ‘stakeholder’ Child Trust Fund. This will be a fund that invests mainly in the stock market, has low management charges and automatically adjusts the investment mix as the child nears 18 to protect earlier gains. Whichever plan you choose all the growth generated will go to the child at 18 with no personal tax to pay. It will also be possible to move a Child Trust Fund account from one authorised provider to another without charges for doing so.

Additional contributions up to £1200 can be made to the fund each year (a year in this case being from one birthday to the next). Each Child Trust Fund ends when the child reaches the age of 18. At this point the child will be free to spend their Trust Fund money any way they choose. It could, for example, help them get through University without running up large debts, or be used as a deposit for a house, or even re-invested in a new savings plan.

We will be more than happy to discuss and assist in setting up your Child Trust Funds for you and give advice on what investments to choose. As with all investments we will also monitor and review their performance so your child gets the most from their Trust fund.

For more information call now on 0845 643 5056