Yahoo Finance How to check if you’re owed up to £2,000 you never knew existed
Right now we could all do with a windfall out of the blue. For most of us it seems like a desperate dream, but for more than 400,000 young adults, it could be a reality.
There’s an unclaimed pot of almost £950m, and there could be more than £2,000 with your name on it.
The cash is in Child Trust Funds (CTFs), which were given to all children born between 1 September 2002 and 1 January 2011.
How much you have will depend partly on when you were born. Until August 2010, each child got £250 (or £500 for those from lower income families), to put into a CTF, and the government topped it up with another £250 at the age of seven. After the coalition government came to power in 2010, they were scaled back, so children received £50 (or £100 for those from lower income families), and the top-up at age seven was cancelled. However, older children may have had as much as £1,000 paid in.
Your holding will also depend on where the money went. Parents could pick from cash accounts or a range of investments. If they didn’t make a choice, the government would put it into a stakeholder CTF (which is a kind of investment CTF). Plenty of these accounts will therefore also have picked up investment growth in the intervening years.
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The final variable is that friends and family may have paid into the account each year.
However, even without top ups you might be surprised how much is sitting in there — the most recent data we have is from April last year, when the average was £2,031.
It seems outrageous that so much money has been left festering in these accounts, but the government figures show that of the 956,000 accounts that had matured by last April, 428,000 hadn’t been claimed.
In fact, there’s more money in matured unclaimed CTFs (£943m) than in those that have been claimed or transferred to ISAs (£844m).
Part of the problem is that lots of people have no idea they ever had a CTF. New parents were given a voucher and information about where they could save or invest, but if they didn’t get round to making a decision, HMRC did it for them.
Of the 6.3 million accounts, 1.8 million were opened by HMRC, so there’s a reasonable chance that nobody in the family ever knew where the money had gone. Others have been lost along the way, as people moved house over the years and forgot to update their details.
Meanwhile, even when parents are well aware of where their money is, it represents a huge missed opportunity. During the tax year 2021/22, £433m was paid into CTFs.
It might feel like an easy option for putting away a nest egg for your kids — you already have the account, so you may as well make use of it. However, it has much less to offer than a Junior ISA (JISA), and you can now switch from one to the other.
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The two accounts have the same tax benefits; the annual limit is the same; the money is still locked away until the age of 18; and it will belong to the child at that stage. However, the JISA has a number of advantages.
If you’re keen to keep your money in cash, they tend to offer more competitive rates. At the moment you can get more than 4% on a JISA, while the best CTF is offering around 3%.
If you’re in an investment CTF, you may be paying over the odds in charges because stakeholder CTFs are essentially tracker funds with charges capped at 1.5%. JISAs are usually much cheaper — an equivalent tracker is almost a third of the cost. CTFs also often offered a fraction of the investment choices available through the JISA.
If you’ve lost track of a CTF, you can use the government website to find it. You need to sign into the Government Gateway, or sign up for an account. Then you can fill out a form with your details, and they will inform you of the provider holding your cash.
Sarah Coles is a personal finance analyst at Hargreaves Lansdown and co-presents Switch Your Money On podcast.
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