Child Trust Funds & The NEW Help To Save Scheme

SAVING - Child Trust Funds (CTFs) were originally set up for children born between 1 September 2002 and 2 January 2011, with a live Child Benefit claim in the UK, providing them with a pot of money at 18 to encourage a savings habit.

Approximately 6 million CTF accounts were opened during this time. The earliest recipients of the funds will be able to claim from September 2020. People can find out whether they have a CTF, and where it is held, on GOV.UK.

HELP TO SAVE

You can open a Help to Save account if you are any of the following:

• receiving Working Tax Credit
• entitled to Working Tax Credit and receiving Child Tax Credit
• claiming Universal Credit and your household earned £604.56 or more from paid work in your last monthly assessment period

If you get payments as a couple, you and your partner can apply for your own Help to Save accounts. You need to apply separately.

You also need to be living in the UK. If you live overseas, you can apply for an account if you’re either a:

• Crown servant or their spouse or civil partner
• member of the British armed forces or their spouse or civil partner

What you will get

You can earn 2 tax-free bonuses over 4 years. You’ll get any bonuses you’ve earned even if you withdraw money.

After your first 2 years, you’ll get a first bonus if you’ve been using your account to save. This bonus will be 50% of the highest balance you’ve saved.

After 4 years, you’ll get a final bonus if you continue to save. This bonus will be 50% of the difference between 2 amounts:

• the highest balance saved in the first 2 years (years 1 and 2)
• the highest balance saved in the last 2 years (years 3 and 4)
• If your highest balance does not increase, you will not earn a final bonus.

The most you can pay into your account each calendar month is £50, which is £2,400 over 4 years. The most you can earn from your savings in 4 years is £1,200 in bonus money.

Your bonus is paid into your bank account, not your Help to Save account.

Example

You pay in £25 every calendar month for 2 years. You do not withdraw any money. Your highest balance will be £600. Your first bonus is £300, which is 50% of £600.

In years 3 and 4 you save an extra £200 to grow your highest balance from £600 to £800. Your final bonus is £100, which is 50% of £200. Even though you withdrew some money after your balance was £800, this does not affect your bonus.

What happens if you withdraw money?

If you withdraw money it will be harder for you to:

• grow your highest balance
• earn the largest possible bonuses

Withdrawing money could mean you are not able to earn a final bonus - depending on how much you withdraw and when.

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