2011 Budget Changes to Child Trust Funds

From January 2011, the government stopped making contributions to child trust funds and no new child trust fund vouchers will be issued. The Welsh Assembly will continue to provide £50 top-up vouchers at age seven, and £100 vouchers to low-income households. Existing vouchers will continue to be valid.

Existing child trust funds will carry on building up, largely tax-free, to age 18, and friends and family will continue to be able to pay in up to £1,200 a year.

Child trust funds will be replaced by Junior Individual Savings Accounts (ISAs) in autumn 2011, and children born from January 2011 will be eligible to open them. It is expected that the structure and rules of junior ISAs will be similar to child trust funds, although there will be no government contribution.

Child Trust Funds - long term savings for Children

Designed to encourage long-term savings for children, every child born on or after 1 September 2002 will receive a Government voucher for at least £250, to be used to open a Child Trust Fund. From 1st August 2010 new vouchers will reduce from £250 to £50 and will cease all together from 1st January 2011.

The Child Trust Fund is a long-term savings and investment account for children launched in April 2005. The Government will make payments to children through this account to help build up a useful stock of assets for when they reach the age of 18. The Child Trust Fund accounts will help to strengthen the savings habit of future generations, spread the benefits of assets ownership to all, educate people in the need for savings and give young people a basic understanding of financial products.

From April 2005 it has been possible to pay up to an additional £1200 each and every year until your child's 18th birthday. Friends and family will also be able to contribute towards the £1200 annual limit.

The Child Trust Fund will belong to your child. All funds, including any growth, will be free of any personal income tax and capital gains tax and available to your child when he or she turns 18.

levels and bases of and reliefs from taxation are subject to change and their value depends on the individual circumstances of the investor.

The value of investments and the income from them may go down. you may not get back the original amount invested.