Urgent warning for parents as thousands of kids missing out on £2,100 free cash – does yours have a lost bank account? | The Sun
THOUSANDS of kids are missing out on an average of £2,100 in free cash, warns a major spending watchdog.
Hundreds of millions of pounds in child trust funds (CTFs) to help young people financially in early adulthood has not yet been claimed.
The National Audit Office (NAO) raised concerns that 145,000 accounts are at risk of becoming forgotten or lost track of by those holding them.
Figures released by the government in October 2022 suggest that these teenagers could have an average of £2,100 in their CTF waiting to be claimed.
A CTF is a long-term tax-free savings account for children born between September 1 2002 and January 2 2011, which they can access when they turn 18.
The government paid more than £2 billion into CTFs for 6.3million children born during this period.
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Most children received around £250 each from the government at the time their CTF was started, while those from low-income families or in local authority care received an additional £250.
This meant that children from low-income families received £500 from the state.
Many CTFs were invested in stocks and shares, with the total market value of CTFs standing at £10.5billion in April 2021.
Some of this belonged to young people aged 18 and over who had not unlocked their accounts.
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By April 2021, around 320,000 CTFs had matured in the seven months since the first CTF account holders reached 18 in September 2020.
Of these, 175,000 (55%) had been claimed by the account holders and the accounts closed, and 145,000 remained unclaimed.
Some £394million was, by April 2021, yet to be claimed in matured CTFs belonging to young adults who had reached the age of 18, the NAO said.
It is unclear how many children and young adults are either unaware of, or unable to locate, their CTF, the NAO said.
Gareth Davies, the head of the NAO said: "At a time of economic hardship for millions of people across the country, it is important the government does enough to make sure young people are aware of, and can access, their child trust funds."
How can you claim?
A CTF matures on the account holder's 18th birthday.
At this point, the child automatically takes over the account and no more money can be added.
Until your child withdraws or transfers the money, it stays in an account that no one else has access to.
If you are one of the tens of thousands of young adults who haven't claimed their account, the government has an online tracing service where you can find out if you have one and which provider it's with.
To find out more, you'll need a government gateway login and National Insurance number.
If you are a parent looking to find out about your child's fund you can either access it online, or you'll need to send a letter to HMRC with the following details:
- Full name and address
- Child’s full name and address
- Child’s date of birth
- Child’s National Insurance number or Unique Reference Number if known
What can you do once you've claimed the money?
While it might be tempting to spend all the cash at once, there are other options available to you.
Households can request the cash directly to their bank account, transfer it into an ISA or invest it.
Here are the full details of what can you do.
Cash it in
You can ask your CTF provider to hand over the money and get it paid into a bank account.
You'll need to share the bank account details you wish to transfer the cash into with HMRC.
Remember you'll need to be at least 18 before you can cash out the savings.
Transfer it into an ISA
You can transfer it into an ISA.
An ISA is an Individual Savings Account and you don't pay tax on the interest you earn in these types of accounts.
You can have a cash ISA – although the interest rates on these are typically lower than a standard savings account – or a stocks and shares ISA, which lets you invest the money if you don't mind taking some risk.
A good option for young people saving to buy their first home is the Lifetime ISA.
You can stash £4,000 a year into these accounts and the government will give you a 25% bonus on your savings as long as you use it to buy your first property, or if you wait until retirement age to access the cash.
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It won't incur income or capital gains tax and will sit until the account holder does something with it.
This isn't a great option though as your money won't be earning interest, which means its value in real terms is often eroded by inflation.
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