PARENTS have been realising they are potentially sitting on thousands in free cash thanks to a handy Martin Lewis tip.
The 51-year-old revealed the useful tip on his Money Show Live on Tuesday, leaving viewers stunned.
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Martin told parents how to make the most of money for your little ones.
The Money Saving Expert said that mums and dads should transfer their Child Trust Fund savings into a Junior ISA.
Any child between the September 1 2002 and January 2 2011 will have a Child Trust Fund, says Martin.
Martin said: “The state will have added money even if you didn’t.
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“Up to a million children have these accounts unknowingly and they are sitting on around £1000.”
The money whizz urged any parents who had a child born in this timeframe to chase up their money.
You can do this by using the gov.uk tool to “trace where the money is”.
Parents can do it for under-18s but children 16 years or older can do it themselves.
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A Junior Isa is beneficial as it protects your child paying tax at your savings rate, says Martin.
The money saving pro said: “Even if you have adopted children or have your own if they are between 12 and 21 and you don’t know about the Child Trust Fund go and check it out now.”
Earlier on Tuesday’s show, Martin revealed to viewers the genius way you can get free cash and a Disney+ subscription before Christmas.
The Money Saving Expert said that you could net free cash in time for the festive season by making the most of certain bank-switching deals.
In general, switching usually takes seven working days and closes your old account, says Martin.
Martin also advised those hunting for Christmas presents to “abandon” their shopping baskets.
Martin says that you should log in, add items to your basket and then walk away to net discounts.
Retailers see shoppers’ activity, so many will remind you about your purchase with an email.
He says this can “often” include a discount code to motivate you to buy 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.
