If your child was born on or after 1st September 2002 and lives in the UK you could set up a Child Trust Fund (CTF) for them. It is a savings and investment account set up by the government who will start the account with a gift of £250 and then when the child is seven, they make another contribution. It is a long-term savings account. Your child will not be able to access the money until they reach 18.
Eligible children receive their voucher shortly after Child Benefit has been claimed and awarded for them.
As well as the CTF voucher, children in families with low incomes will get an additional payment from the government. This will be paid directly into the accounts of children who live in families receiving Child Tax Credit.
In addition to the government’s contributions you, your family and friends can invest up to £1,200 a year (in total), tax-free, for your child.
Who can open the account?
The CTF voucher is sent to the person who receives Child Benefit for the child. The person who opens the account will be the 'registered contact’, responsible for managing the account until the child reaches 16. This doesn't have to be the person who receives the CTF voucher. The ‘registered contact’ is sent the annual statements and can move the account to another provider or change the type of account if they wish.
Paying money into a CTF Account
You can pay £10 into a stakeholder account at a time and sometimes less if the provider allows it.
Charges
The charge on the stakeholder account is limited and the CTF fund will pay no more than 1.5 per cent of the overall value of the CTF fund value per year. Only the Stakeholder Standard CTFs are limited in this way – other types of accounts are not.
Taxation
You won’t pay any income tax or capital gains tax on any returns (profits) you make on a CTF account. Your entitlement to other family benefits and tax credits are not affected.
Term
Funds must remain invested until your child reaches the age of 18 and they can only be accessed by the child.
When a CTF matures, the proceeds can be moved into an Individual Savings Account (ISA) so that the funds can remain within a tax-free environment.

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