“With the first wave of Child Trust Funds (CTF) due to mature this September, the government has taken a positive step to change the rules so the money can be held in an ISA or a continuation of the CTF (a protected account) should no instruction be given on what to do with the money as it matures.
“Many people won’t know they have these accounts because they have simply forgotten about them or did not know they exist. It is therefore important that the tax benefits they have enjoyed through these accounts continue while providers aim to trace the customer.
“However, providers must keep trying to trace owners of these lost accounts to ensure they can decide what is best for their money. While it is great account holders won’t receive any unexpected losses due to tax, these people need to be aware they have money just idly sitting in an account potentially achieving very little. For those turning 18 in September, it is important to have the conversation with their parents now to discover if they have a CTF.
“The good news for those with one is that these funds are easy to trace and with £700m* due to mature next year there is likely to be a large swathe summing up whether to spend or save it.
“Taking time to have the conversation now about how to use the money will mean that CTF holders can plan ahead. That will give them the chance to make an informed decision about what is best for them and their finances. This could include investing it in an Isa or make use of the government bonus offered through the Lifetime Isa to save for a property or later life.”
Following a Freedom of Information request to HMRC, Quilter discovered that £700m worth of Child Trust Funds will mature during the 2020-21 tax year, while the total held in policies due to mature over the next decade had reached £7.5bn.