**
A staggering 758,000 young adults in the UK are losing out on an average of £2,242 from their Child Trust Fund accounts, according to recent findings from HM Revenue and Customs (HMRC). These tax-free savings, set up for every child born between 1 September 2002 and 2 January 2011, represent a crucial financial boost that many young people have yet to claim. As the government urges individuals to check their accounts, stories of those who have benefited highlight the importance of this fund in easing the transition into adulthood.
The Benefits of Child Trust Funds
Introduced by the Labour government in 2005 under Tony Blair, Child Trust Funds were established to encourage savings for young people. Initially, the government deposited £250 into each account, with an additional £250 for children from low-income families or those in local authority care. These funds not only provided a financial cushion but also offered a sense of independence as young individuals approached adulthood.
At the age of 16, account holders can take ownership of their funds and withdraw the money when they turn 18. With the potential for growth through interest, many accounts are worth considerably more than the initial deposit. Additionally, parents or guardians have the option to contribute up to £9,000 annually, although new accounts can no longer be created since the scheme was discontinued by the Conservatives in 2011.
A Personal Experience
Hope Kerr-Williams, a 22-year-old apprentice from Nottingham, is one of the fortunate individuals who successfully claimed her Child Trust Fund. When she turned 18, the account had grown to £5,000. “I was counting down the days until I could claim my child trust fund as I was planning my move to Sheffield,” she shared.
Hope used her funds to secure a deposit on her flat, cover her first month’s rent, and purchase essential items for her new home. “Having my child trust fund account saved me from going into an overdraft or borrowing money when I had a lot of expenses at the start of university. It gave me independence and a great start to adult life, which I’m still grateful for,” she added.
How to Locate and Claim Your Child Trust Fund
For those who may have lost track of their Child Trust Fund, HMRC has provided straightforward guidance. Many young adults and their guardians forget about these accounts or misplace the necessary details. The government advises against using third-party agents who often charge exorbitant fees for assistance.
Instead, individuals can search for their Child Trust Fund by visiting the Gov.uk website and using the free tool provided by The Share Foundation. This simple process involves entering a few personal details, after which accessing the account becomes a hassle-free experience.
Once the funds are located, there are several options available. Charlene Young, a pensions and savings expert at AJ Bell, emphasised the importance of making informed choices. “Once you’ve tracked down the money, you can choose to either transfer it to an adult ISA or withdraw the funds. Until then, your money will just sit in an account that no one else has access to, possibly incurring high charges,” she explained. Transferring money to an adult ISA will not affect the annual ISA allowance of £20,000 for individuals over 18.
Why it Matters
The fact that over three-quarters of a million young adults are missing out on significant financial resources is a pressing issue. These funds could provide a vital lifeline for many as they navigate the challenges of adulthood, from housing costs to educational expenses. Encouraging young people to check and claim their Child Trust Funds not only highlights the importance of financial literacy but also empowers them to take control of their financial futures. It is a reminder that sometimes, the key to unlocking opportunities lies in our past, waiting to be reclaimed.
