HMRC Calls on Young Adults to Reclaim Forgotten Child Trust Funds
The UK's tax authority, HMRC, has issued a warning that thousands of young adults and teenagers may have forgotten money sitting in dormant accounts. Specifically, individuals born between September 1, 2002, and January 2, 2011, could be entitled to claim an average of £2,200 from their Child Trust Funds.
What Are Child Trust Funds?
Child Trust Funds were a government-backed savings initiative established for every child born within that nine-year period. The scheme provided a long-term, tax-free savings account where the government deposited an initial £250. Parents were then permitted to save up to £9,000 annually into the account.
While HMRC reports that the average account now contains £2,200, parents who maximized their contributions each year could have accumulated over £160,000 by the time their child turned 18.
How to Access the Funds
Only the account holder—the child for whom the fund was established—can withdraw the money once they reach 18, though they can assume control from age 16. If left unclaimed, the funds remain dormant indefinitely.
To assist in locating these accounts, HMRC offers a 'Find your Child Trust Fund' tool on its website. The process is straightforward:
- If you have the account details, you can contact the financial institution directly to make a withdrawal.
- If details are lost, you can request information from HMRC by providing the child's National Insurance number, full name, address, date of birth, and any previous names.
HMRC typically responds within three weeks with a letter containing the provider's details. Note that additional documentation may be required for adopted children or those under court-ordered parental responsibility.
Why Claim Now?
The oldest eligible individuals are now 23, meaning some savings may have been idle for five years. Meanwhile, the youngest are still three years away from accessing their funds. Claiming is beneficial as the money is not subject to income tax, and many choose to transfer it into adult ISAs to maintain the tax-free advantage.
HMRC's call to action, posted on social media ahead of the new tax year, emphasizes the importance of verifying entitlement to these forgotten assets. With thousands potentially missing out, using the online locator tool is a crucial step for young adults and their families to reclaim what is rightfully theirs.
