Child Trust Funds are a legacy long-term tax-free savings account for children born in the UK between 1 September 2002 and 2 January 2011. Each child born within that period was given a voucher, normally worth £250, which had to be used by the parent to set up a Child Trust Fund with the provider of their choice. If the parent did not make a choice within a year of the child’s birth, then the Government randomly allocated their CTF to one of a number of providers.
Like Junior ISAs, money in Child Trust Funds cannot be accessed until the child turns 18 which means that there are still many CTFs in existence, but often in a type of account that is now many years out of date.
Questions around CTF transfers are really common as there are not many years left until the remaining accounts mature and it is now 14 years since they were replaced by Junior ISAs. We’ve picked out some of the questions we see most often to answer in this article.
1. Can I transfer my Child Trust Fund to a different provider?
Although in theory you can transfer your child’s CTF to another CTF provider, as new CTF accounts can no longer be opened, this is not a common thing for people to do.
It is much more common to transfer the Child Trust Fund into a Junior ISA. Given that CTFs have been a legacy product for 15 years Junior ISAs typically offer many more features and are often much better value.
2. How do I transfer my Child Trust Fund to a Junior ISA?
To transfer a CTF to a Junior ISA you will need to follow your chosen JISA’s transfer process and this will vary from provider to provider. You apply for a Junior ISA with your chosen provider and tell them that you have an existing CTF to transfer and they will tell you what to do.
At Beanstalk we make this process as simple as possible. We ask you to complete and return our Junior ISA transfer form. Once we’ve received the form we take care of the rest of the transfer, liaising with your existing provider to transfer the funds across.
3. Is there a fee to transfer a Child Trust Fund?
Usually transferring a CTF is free but you should check with your CTF provider's conditions to make sure they do not charge exit fees. With Beanstalk it is free to transfer a Child Trust Fund into a Beanstalk Junior ISA.
4. Are there any tax implications when transferring a Child Trust Fund?
No, there are no tax implications when transferring a CTF. The funds you’re transferring will remain tax-free which means you won’t need to pay tax on any interest or investment gains earned.
Junior ISAs are also a long-term tax-free account so once the account has been transferred there will be no tax to pay moving forward either.
5. What happens to a CTF when a child turns 18?
When a child turns 18 the CTF matures and they get access to the savings in the account. No further contributions can be made to the account and the funds can then be withdrawn or the account can be transferred to an adult ISA.
6. Can I transfer a Junior ISA to a CTF?
No, you cannot transfer a Junior ISA to a CTF as it is not possible to set up a new Child Fund. You can transfer a Junior ISA to another Junior ISA provider though if you’re unhappy with the provider you’re with currently.
7. Can I open a new CTF?
No, you cannot open a new CTF. The Child Trust Fund scheme ended in January 2011. The only CTF accounts remaining were opened before this date.
In summary transferring a Child Trust Fund to a Junior ISA is simple to do. At Beanstalk we receive lots of CTF transfers into our Junior ISA with parents saying they want an account that is easier to manage and has significantly lower fees as a couple of the main reasons behind the switch.