HMRC Calls for Action on Unclaimed Child Trust Funds
HM Revenue and Customs (HMRC) has issued a renewed alert regarding substantial unclaimed funds, urging eligible individuals to come forward. In a recent social media post, the tax authority highlighted that an estimated 758,000 people have yet to claim missing payments, with the average amount sitting at approximately £2,200. These funds are tied to lost Child Trust Funds, a government-backed savings initiative.
Background of the Child Trust Fund Programme
The Child Trust Fund programme was originally launched by the Labour Party government in 2005 as a long-term savings scheme for children. Under this initiative, every child born between September 1, 2002, and January 2, 2011, was automatically provided with a tax-free savings account. The government contributed an initial payment of £250 or £500 per child, depending on the family's financial circumstances at the time.
Parents and guardians were encouraged to add extra funds to these accounts voluntarily, with the stipulation that withdrawals could not be made until the child reached 18 years of age. The accounts were designed to foster financial security and savings habits from an early age, offering a secure vehicle for future needs.
How to Claim Your Funds
HMRC has streamlined the process for tracing and claiming these funds. Individuals can use an online service available on Gov.uk to locate their Child Trust Fund provider. After submitting a request through this tool, HMRC typically sends a letter with the provider's details within three weeks. If no response is received within six weeks, claimants are advised to contact HMRC directly, including any reference numbers if available.
It is important to note that the funds legally belong to the child and can only be accessed once they turn 18. However, children can assume control of the account from the age of 16. There are no tax liabilities on the income or gains generated within the Child Trust Fund, and it does not affect any state benefits received by the family.
Additional Benefits and Considerations
For those with existing Child Trust Fund accounts, parents can continue to contribute up to £9,000 annually, enhancing the potential savings. HMRC estimates that the average balance is around £2,212, but this figure can be significantly higher if additional contributions were made over the years. Even small, infrequent deposits from the past could result in a much larger sum today, making it crucial for eligible individuals to check their status.
This initiative underscores the importance of financial awareness and proactive management of long-term savings. With hundreds of thousands of pounds remaining unclaimed, HMRC's call to action aims to ensure that these funds reach their rightful owners, providing a financial boost as young adults embark on their independent lives.
