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The Child Trust Fund - a step-by-step guide

The Child Trust Fund (CTF) will help you save for your child’s future. This step-by-step guide tells you about the CTF, the different accounts and CTF providers.

Posted: 22 February 2007
by ThinkBaby

The Child Trust Fund (CTF) will help you save for your child’s future. This step-by-step guide tells you about the CTF, the different accounts and CTF providers. For more information visit

1) The Child Trust Fund is a long-term savings and investment account

It’s been created specially for children and the Government will send you a £250 voucher to start the account.

2) Dig out your Child Trust Fund voucher

If you can’t find your voucher or never received one, call the Child Trust Fund Helpline on 0845 302 1470.

3) Choose the type of Child Trust Fund account for your child

There are three types of account:

  • Stakeholder accounts
  • Shares accounts (non-stakeholder)
  • Savings accounts (non-stakeholder)

4) Choose a Child Trust Fund provider

There are lots of CTF providers, from banks and building societies to friendly societies and supermarkets. Choose one from the list you’ll find on our website –

5) Ask your chosen Child Trust Fund provider for an application form

Simply fill in the form and take or post it with your child’s voucher to your chosen CTF provider. You can also open an account by phone or online with some CTF providers.

6) What to do after you’ve opened your child’s Child Trust Fund account

  • You don’t have to add to the account, but even small amounts could grow into something worthwhile for your child when they reach 18
  • Let family and friends know you’ve opened the account as they may want to put money in as well. The total amount that can be put in each year is £1,200.
  • You can change the account or CTF provider at any time if you want to – usually this will be without charge.

Key facts about the Child Trust Fund

  • The CTF is a long-term savings and investment account for children born on or after 1st September 2002.
  • The money in the CTF account belongs to your child and your child alone. But it cannot be taken out until they turn 18 when they can decide how to best use the money.
  • You, your family, friends and, in time, your child can contribute between you a total of £1,200 a year to the CTF account.
  • Money in your child’s CTF account will not affect any benefits or tax credits you receive.
  • Neither you nor your child will pay tax on money earned in a CTF account.

Is there more money for children in families on a low income?

We make an additional payment of £250 directly into CTF accounts where the child is in a low income household (£14,155 or less in 2006-07) at the time when Child Benefit is first received. If your child qualifies for this payment it will be made automatically once you have opened an account and your Child Tax Credit award has been finalised.

Will there be any more Government payments?

Your child will receive a further £250 payment directly into their account around their seventh birthday. Again, children who are part of a lower income household will receive an additional £250. The Government is considering another payment for when children are at secondary school.

What happens if I don’t use the voucher?

If you don’t open an account by the expiry date on the voucher, we will arrange for a CTF provider to open a stakeholder account for your child. You will be sent a letter to tell you where the account has been opened. If you want to, you can move it to a different CTF provider or change the type of account.

Choosing the type of Child Trust Fund account

You need to bear in mind that this is a long-term account. The money cannot be taken out until your child is 18.

When putting money away for a long time, accounts that invest in shares almost always produce a better return than savings accounts. In fact, this has been the case for every 18-year period in the last 40 years.

This doesn’t mean that there were not some years when shares didn’t perform well. But when shares don’t do well in one year, this is usually made up for by better performances in other years.

Remember, although in the past shares have done better than savings accounts over the longer term, this does not guarantee that they will do so in future.

Stakeholder accounts

Stakeholder accounts invest your child’s money in shares in companies. When those shares do well, the account will grow. The Government has made certain rules for these accounts to simplify them and reduce the cost and risk of investing for the longer term.

Once your child is 13, money in the account starts to be moved from shares to investments that have less chance of reducing in value in the short term. All CTF providers must accept a minimum payment of £10 into a stakeholder account – and they can accept less if they wish. The total charge your CTF provider can make for running the account is no more than 1.5 per cent a year – no more than £1.50 for every £100 in the account.

Shares accounts (non-stakeholder)

This type of account invests your child’s money in shares – and other investments - but without the rules to reduce the risk when investing money for the longer term that apply to stakeholder accounts.

The charges on this type of account are not limited in the same way as stakeholder accounts. You should check how much these will be with your chosen CTF provider.

Savings accounts (non-stakeholder)

If you don’t want to invest in shares, you could choose a savings account for your child. Your child will get back whatever has been put into the account, plus some interest.

However, although the money earns interest in a savings account, it might not grow as much as it would if it was invested in shares. And, despite earning interest, money in the account can lose value. This is because of inflation – the fact that prices usually rise each year. For example, £20 won’t buy as much today as it did ten years ago.

As with all accounts, CTF providers will charge you for the costs of running a savings account but you will not see this charge on your statement because CTF providers will cover these costs when deciding how much interest to pay you.

Choosing a Child Trust Fund provider

There is a range of CTF providers. All offer a stakeholder account and some also offer other types of account. Before choosing, you should:

  • take a look at the list of CTF providers. The most up-to-date version is on our website
  • check charges made by CTF providers for running the account.
  • consider how much you or family and friends might want to pay into the account. All CTF providers must accept a minimum
  • contribution of £10 into a stakeholder account, but they may require larger payments for other accounts.

You might want to look at information from more than one CTF provider.

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