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Child trust funds to end in January 2011

Coalition government puts paid to CTFs

Government spending cuts announced today spell the end of child trust funds (CTFs). Payments at birth will fall to £50 from 1 August 2010 and stop altogether from 1 January 2011. The government has estimated that the cut could save £320m.

Free books for babies and toddlers

Bookstart offers free books for babies and toddlers

Payments cut for 2010

Currently, all new-born children receive a voucher for £250 to open a child trust fund (CTF) account. The money can be invested in a cash CTF, a stakeholder CTF or a shares-based non-stakeholder CTF. From 1 August 2010, the government will cut its initial contribution to £50. For low-income families, payments at birth will be reduced from £500 to £100. 

Disabled children will still receive the £100 promised by the previous government for 2010 and severely disabled children will receive £200. 

At 7 years old, all children currently receive a further government contribution to their CTF account. These will cease from 1 August 2010.

Payments ended from 2011 

From 1 January 2011, all government contributions to CTFs will cease. Payments that would have been made to disabled and severely disabled children will be redirected to other forms of support.

Tax-free saving for children    

The immediate future of existing CTFs is unclear. At the moment, they are tax-free savings accounts into which parents, friends and relatives can contribute up to £1,200 each year. 

Other tax-free investments for children include NS&I Children’s savings certificates and premium bonds

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