What is a Child Trust Fund?
A Child Trust Fund (CTF) is a long-term savings and investment account that encourages parents to save for their children. When you register to receive Child Benefit you’ll receive a voucher worth at least £250 to use to open a Child Trust Fund account for your child.
The account belongs to your child and only they can access the money - and only when they turn 18.
The Santander Child Trust Fund is linked to the stockmarket so the investment has potential to grow over the longer term but please note that the value of investments can fall as well as rise so your child could get back less than the amount invested. Although tax rules may change in the future, the returns are currently free from income and capital gains tax.
The Government will also contribute:
- An initial £250 voucher to open your child’s account
- An extra £250 will be credited to the accounts of lower income families*
- Around your child’s 7th birthday, a further £250 will be credited to their account (£500 for lower income families*)
*Only children with a household income below the Child Tax Credit income threshold (£15,575 for 2008/9) will qualify for these payments.
You can add to your child’s account
The Government contributions are a great start, but to make a really big difference you can invest regular additional amounts every month or make occasional one-off payments throughout the 18 year account period. Remember, once money has been paid in, no-one can access it apart from your child, and only when they turn 18. The money in a CTF does not affect family benefit and tax credits.
Contributing to your child’s CTF is easy. You can make your payments by direct debit, cheque, telephone or Internet banking.
The good news is anyone can do it. Parents, grandparents or other friends and relatives can all contribute up to £1,200 a year between them. The account year ends on the day before your child’s birthday.
Visit Santander for more information and to apply online.