Nearly half a million 18 to 21-year-olds are missing out on an average of £2,000 they have left unclaimed.
HMRC are urging the 430,000 with unclaimed Child Trust Funds to claim their cash as part of UK Savings Week this week.
Angela MacDonald, HMRC’s Second Permanent Secretary and Deputy Chief Executive, said claiming the money could make a “real difference to their future plans”.
What is a Child Trust Fund?
Child Trust Funds are long-term, tax-free savings accounts and were set up for every child born between 1 September 2002 and 2 January 2011, with the government contributing an initial deposit of at least £250. Funds can be withdrawn once the account matures when the child turns 18.
A recent student survey, conducted by UCAS, asked first and second year university students about Child Trust Funds and the results showed that they were most interested to know how much money was in their account (43%) and how to claim it (32%). The survey also revealed 60% of students got their information about Child Trust Funds from their parents.
Angela MacDonald added: “Many 18-21 year olds are starting out in first jobs or apprenticeships, starting university or moving into their first home and their Child Trust Fund is a pot of money with their name on.
“I would encourage young people to use the online tool to track it down or, for parents of teenagers, to speak to them to ensure they’re aware of their Child Trust Fund. It could make a real difference to their future plans.”
Do I have a Child Trust Fund?
There are currently 5.3 million open Child Trust Fund accounts. Young people aged 16 or over can take control of their own Child Trust Fund, although the funds can only be withdrawn once they turn 18. More than 500,000 matured Child Trust Fund accounts have been claimed or transferred into an ISA since the oldest children on the scheme turned 18 in September 2020.
Families can continue to pay in up to £9,000 a year tax-free into a Child Trust Fund until the account matures. The money stays in the account until the child withdraws or reinvests it into another account.
Young adults and parents can search on GOV.UK to find out where their Child Trust Fund account is held.
Sharon Davies, CEO of Young Enterprise said: “We would encourage all young people to investigate if they have money which is unclaimed in a Child Trust Fund and to use it wisely.
“A disproportionate amount of the money is unclaimed by young people from disadvantaged backgrounds who are the very people who would benefit most from these funds.
“The investment could be placed into an adult ISA or put towards driving lessons, education or starting a business.
“The money in a Child Trust Fund has the potential to be life changing and the lack of knowledge about them shows the importance of financial education and financial planning from a young age”.