MARTIN Lewis has called for the government to “pull its finger out” and help 80,000 people who are missing out on £1,000s of free cash.
The MoneySavingExpert.com founder grilled government minister Maria Caulfield MP on Good Morning Britain earlier this week about Child Trust Funds (CTFs).
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Tens of thousands of young people with special educational needs and disabilities are locked out of their savings held in CTFs.
CTFs are long-term, tax-free savings accounts and were set up for children born between September 1, 2002, and January 2, 2011.
Many children got around £250 each from the state at the time their CTF was started, while those from low-income families or in local authority care received an extra £250.
Funds can be withdrawn once the child turns 18.
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Martin asked her: “Is the Government going to pull its finger out and help these parents?”
Ms Caulfield replied that the Department for Work and Pensions and the Ministry of Justice “are picking up this issue”.
The parliamentary under-secretary of state added that it’s a “priority area for the Government”.
But the minister said “it’s very tricky to pin-point one solution”.
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Taking to Twitter/X, Martin wrote: “The disgraceful situation for children with special ed needs Child Trusts Funds is being debated at parliament tomorrow (a Westminster Hall debate) – its outrageous their money is still locked away.
“I wrote to the then children’s minister about it but got nothing… very glad to hear more light is being shined on it.”
What is a Child Trust Fund and does my child have one?
Kids born between 2002 and 2011 also had the opportunity to set up a child trust fund themselves.
HMRC sent the parents or guardians of qualifying children a starting payment voucher of £250 (or £500 if you were on a low income).
If you didn’t set one up for your child within a year, HMRC would do it automatically.
Anyone can add to the account thereafter, and you can put up to £9,000 a year into it.
The year starts on the child’s birthday and ends the day before their next birthday.
Your child will have full control over the account once they turn 18.
At that point, no more money can be added either.
Until your child withdraws or transfers the money, it stays in an account that no one else has access to.
CTFS were replaced by Junior ISAs in November 2011, so you can’t get one now.
How do I find an account?
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 happens after I’ve claimed the money?
There are a few options to consider once you’ve taken the money out of a matured trust fund.
Usually people put it straight into a bank account, invest it or transfer it into an ISA.
You can ask your CTF provider to hand over the money and get it cashed into your account.
This way you’ll need to share the bank account details you wish to transfer the cash into with HMRC, and you won’t be able to do this until you’re 18.
But if you’d rather invest it, you can transfer it into an ISA (Individual Savings Account).
The interest rates on a cash ISA are typically lower than a standard savings account, but a Lifetime ISA may be better if you’re saving for your first home.
If you go for a Lifetime ISA, you’ll be able to add £4,000 a year to the account and the government will grant you a 25% bonus as long as you put it towards buying a first home.
You can also wait until retirement to access the cash.
And keep in mind you don’t pay tax on the interest you earn in these types of accounts.
Meanwhile, Martin Lewis has once again given people a great tip on how to get back some money they might be owed.
Plus, shoppers looking for a bargain advent calendar can save hundreds of pounds by using another tip from Martin Lewis’ MoneySavingExpert.
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