The Child Trust Fund

Robert_Sterling_3

Promised three years ago.
For those born on  :) or after 01 September 2002.
Minimum value of voucher £250
Max Value £500.
The voucher will be automatically sent to parents in the next financial year.
Maybe before the General election. ;D
I think you have to put the money in a Child Trust Fund until its 18th Birthday.
Then it goes into equities until child is 13 years old.
Then gradually out of equities as they age from 13 to 18.
The Child Trust Fund can have charges of not more than 1.5% ( plus a number of other small charges) . 

Some models won't get out of bed for less than £10,000.
Some providers of Child Trust Fund Accounts will not get excited about opening an account and getting less than £4.
The government might put some more in later or might not.
I think a parent or maybe each parent can put in up to £1200 per annum.
Taking, as ususal?, a wildly optimistic view of the prospects for eqities over an 18 year period the value of the fund if it only holds the initial £250 for 18 years is estimated in the Times to be £635 whereas the cost of higher eduction in 2010, let alone in 2020 is estimated to be £33,000.
Heigh Ho.

[For further info see  Helen Pridham  The Times Money Section Today ]

dunstonh

anyone can pay in to the CTF, not just parents. So grandparents can use it.

The choice of equities is not strictly correct either. There will be all sorts of accounts available including cash deposits, unit trusts and life products.

It is likely to be grandparents who will utilise it the most. They can use their gift allowance (for IHT purposes) and pay into the CTF which will be tax free knowing that the child wont be able to access it until 18.

isasmurf

For those born after 01 September 2002.

To be picky, it's for those born after 31 August 2002.

Minimum value of voucher £250
Max Value £500.
The voucher will be automatically sent to parents in the next financial year.
Maybe before the General election. ;D

A voucher will be sent to the child benefit claimant.  The voucher will be worth £250, with those children in households with an annual income less than the child tax credit limit (£13,430) receiving an extra £250.  The vouchers will start to be sent out in January 2005 so that everybody that should have received one will have by the time accounts become available on 6th April 2005. I'm not sure if, once you have a voucher, you can apply for an account before they become available ready for April 2005.
I've just found out that for children born before 6th April 2005, the amounts will be different according to when they were born as follows :
1st September 2002-5th April 2003: £277
6th April 2003-5th April 2004: £268
6th April 2004-5th April 2005: £256

I think you have to put the money in a Child Trust Fund until its 18th Birthday.

You have one year to invest the voucher in a CTF product.  If you have not done so after one year the Government ( or more specifically the Inland Revenue - or their successor HM Revenue and Customs by then) will do so on behalf of the child.  For those receiving vouchers before the CTF products become available in April they have 12 months from the date of issue to open a CTF.

Then it goes into equities until child is 13 years old.
Then gradually out of equities as they age from 13 to 18.
The Child Trust Fund can have charges of not more than 1.5%.  
I expect that is 1.5% per annum.

I think all this  only applies to the Stakeholder version of the Child Trust Fund (which the Government will invest in if the parent has not do so after one year).  Other CTF products should be available, including as DD says, cash saving account type products.  The 'Qualifying investments' for the CTF are broadly the same as those for ISAs. I think providers can start to apply to sell the CTF from this month, so we should start to get some idea of who and what form these products should take in the next couple of months.

The government might put some more in later or might not.

The Government will make another payment on the Child's 7th birthday.  The amount of this payment is yet to be decided.

I think a parent or maybe each parent can put in up to £1200 per annum.

The CTF has an annual limit of £1,200 - the year starts from the child's birthday, not the beginning of the tax year.  For the first year, the annual limit will re-start on the child's next birthday, i.e. if the child's birthday is 1st June then they have £1200 to end of May, then another £1200 from the beginning of June.  As the account belongs to the child any person, including parents, grandparents, uncles, aunts and friends can put up to this amount in to the account.  The child could pay their wages into the fund if they wanted to.

The money belongs to the child, and as such will be locked in to the Child's 18th Birthday.  I think there are plans that terminally ill children can have early access to their fund before their 18th birthday.

The account will be managed by a 'responsible adult' -and only one adult-, but a child can take over the management of the account on their 16th birthday.

Hope this clears some things up.

Robert_Sterling_3

Within the overall limit of £1250 per year ( Birthday to Birthday ) it looks as if the world and his wife can contribute to your child's fund.
Not just family and friends but charities, institutions, businesses, Local authorities etc.

The usual income tax regulation about parents money investing in an account for a child will not apply to this account.  The account will be free from income tax.

The Bill was passed in Parliament in May 2004.
Details were published in June 2004.

Robert_Sterling_3

The CTF has an annual limit of £1,200 - the year starts from the child's birthday.

I think the £1200 is in addition to the voucher value.

Robert_Sterling_3

The Tunbridge Wells Equitable Marketing Group seem to be well involved in all this.

dunstonh

The Tunbridge Wells Equitable Marketing Group seem to be well involved in all this.

Most of the friendly societies will be as their normal plans will not be as good as the CTF.