Rather than demanding money, HM Revenue and Customs (HMRC) is giving it away for once with a new campaign to reunite thousands of young Britons with forgotten savings accounts typically containing £2,200.
Background of Child Trust Funds
Child trust funds (CTFs) are tax-free savings accounts introduced by the Labour government in 2005 for children born between September 2002 and January 2011. The initiative aimed to encourage parents to save for their child's future. Many children received around £250 from the government when the account was opened, and those from low-income families or in local authority care could receive an additional £250.
Parents were expected to take control of the fund and could add up to £9,000 annually. If a parent did not open an account within 12 months of a child's birth, HMRC opened one on their behalf. The initial government contribution was invested in the stock market, and the average balance is now estimated at £2,200.
Current Campaign
HMRC is contacting 21-year-olds as part of a new awareness drive around lost CTFs. Lucy Rigby, City minister and economic secretary to the Treasury, stated: "Hundreds of thousands of young people in this country don't know they have a CTF, let alone how to access it. Some will have a couple of thousand pounds sat there that would really help them as they begin adult life."
The savings accounts are not held by the government but are with banks, building societies, or other savings providers. This week, Rigby met stakeholders, including representatives from HSBC and Nationwide, to identify ways to connect savers with their accounts.
How to Access Funds
Once the account holder turns 18, the CTF matures, and the owner can withdraw the money or reinvest it. Currently, two-thirds of the more than 6 million recipients are over 18 and entitled to access their funds. However, more than 750,000 CTFs remain unclaimed.
Young people can locate their account using the government's free online tool. If they know the provider, they can contact the savings firm directly. The Share Foundation charity, which advocates for HMRC-allocated accounts to be automatically released when holders turn 21, also assists with searches.
In the first phase, HMRC is writing to all 21-year-olds with unclaimed accounts. The tax authority chose this age group because many are in work or have accessed student finance, making it more likely to have up-to-date contact details.
