Child Trust Funds and Junior ISAs
Hidden away in the detail of the 2013 budget was an announcement that the Government plan to undertake a consultation on the options for transferring a Child Trust Fund (CTF) into a Junior ISA.
CTFs were scrapped in late 2010 when the Government introduced Junior ISAs. Since then, many providers have abandoned their CTF offerings.
If you have a child born between 1 September 2002 and 2 January 2011 and you invested the £250 Government voucher into a CTF, you may have seen poor returns from your child’s savings over the last few years; in particular the interest rates on cash CTFs have been low in comparison to their Junior ISA counterparts. In addition, many CTF providers have introduced annual charges on their accounts which makes them increasingly more expensive to hold.
With only a small choice of CTF providers remaining, savers have been stuck with poor rates and very limited options to transfer.
The consultation is therefore good news for millions of families. The ability to switch a CTF into a Junior ISA will vastly increase the range of investment options available and savers would be able to benefit from the lower charges that come with a more competitive market.
We will, of course, keep you up to date on the results of the consultation. If you have any questions or would like to discuss your personal circumstances in more detail, please do contact us.