Website of the UK government

How the Child Trust Fund works

You use the government voucher to invest in a special account that your child will be able to access when they reach 18. Parents, family and friends can add up to £1,200 to the account each year. There is no tax to pay on the CTF income or any gains (profits) it makes until your child reaches age 18.

Who is eligible

Your child will be eligible if they:

Your child will not be eligible for a Child Trust Fund if you're an asylum seeker waiting for your asylum claim to be processed.

How much your child will get

The government will send you a CTF voucher of £250 to start your child's account.

If your child is part of a household getting Child Tax Credit, with a household income at or below £15,575 for tax year 2008-09 (£16,040 for tax year 2009-10), your child will get an extra £250 although this will be paid directly into the Child trust Fund account.

You'll also get an additional payment of £250 (£500 if you're on a low income) once your child reaches seven years of age.

• Find out how much CTF your child will get Opens new window

Issue of the CTF the voucher

To qualify for a voucher you have to be claiming Child Benefit for your child.

If you haven't received a voucher within a month of starting to claim Child Benefit, or if you lose the one you have, call the CTF helpline on 0845 302 1470 or textphone on 0845 366 7870 (8.00 am to 8.00 pm seven days a week).

If you don't open a Child Trust Fund account within 12 months of the date shown on the voucher, the government will open a Child Trust Fund account for your child.

• Find out more about Child Benefit

Types of Child Trust Fund account

There are three types of account:

Stakeholder accounts

Stakeholder accounts invest your child's money in a number of companies in order to reduce the risk. They also meet government standards on low charges. Once your child is 13, the money is moved to lower-risk investments, so your child's money is safer as they approach 18.

 (If you don't use the CTF voucher before it expires, HMRC will open a stakeholder account for your child.)

• Find out more about the Stakeholder Child Trust Fund on the Stakeholder Saving site Opens new window

Accounts that invest in shares

These accounts invest your child's money by buying shares in companies.

Shares give part-ownership of a company, so the value of your account is linked to how the companies performs. It's important to remember that the value of shares can go down as well as up.

Savings accounts

If you don't want to invest in shares, you could choose to open a savings account instead. Savings accounts are seen as a safe place to keep money. But the interest paid usually only makes up for inflation keeping the 'buying power' of your childs money the same.

• Further information about the different types of account Opens new window

Opening a Child Trust Fund account

You can open a Child Trust Fund account:

Shopping around

Before you open a Child Trust Fund account it's a good idea to shop around to find what different accounts offer before deciding on the right one for your child.

• Check the official CTF website for a list of CTF providers and distributors Opens new window
• Find out how to open an account Opens new window

Managing the account

The CTF account will be in the child's name, but the person who opens it (usually the parent) is responsible for managing it. This includes keeping account statements safe, letting the relevant people know if there is a change of address, and changing the account or provider - depending on the child's best interests.

Your child will take responsibility for their account for themselves when they reach 18 at which time the money will be available to them.

Adding money to the account

You, other family members and friends can make contributions to the fund up to an annual limit of £1,200. This limit runs from your child's birthday in one year to their next birthday.

• More about managing and running a CTF account Opens new window
• Adding money to a Child Trust Fund account - find out more Opens new window

How the account is taxed

The Child Trust Fund is tax-free until your child is 18. This means that neither you nor your child will pay tax on income and gains in the account during this time. Once they reach 18 the fund will be taxed in the normal way.

• Tax on savings and investments

Other savings accounts for children

If your child isn't eligible for a Child Trust Fund account, you can still start saving for them. There are many accounts on the market specifically for children.

• Children's savings schemes and accounts

More useful links

• Child Trust Fund factsheet - available in nine languages Opens new window
• Child Trust Fund website Opens new window
• Children's savings schemes and accounts
• Planning your personal finances
• Having a baby, childcare, working parents and more (parents section)
• Child Trust Fund (CTF) if you're from abroad Opens new window