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5.2.3 Child Trust Fund

SCOPE OF THIS CHAPTER

Further Information about Child Trust Funds can be found on the Inland Revenue Website

This chapter was included in the second version of the Bradford Children's Social Care Manual of Procedures. It came into force in January 2008.


Contents

  1. What is the Child Trust Fund?
  2. Who is Eligible?
  3. How does the Child Trust Fund Work and how much is it Worth?
  4. Can Additional Payments be made?
  5. Who can Access the Money in the Child Trust Fund?
  6. Exceptions
  7. Child Trust Funds and Looked After Children
  8. Roles and Responsibilities of Local Authorities
  9. Parental Responsibility
  10. Social Worker Responsibilities


1. What is the Child Trust Fund?

The Child Trust Fund is a savings and investment account designed to give children born on or after 1 September 2002 a financial start in life and to help teach them the value of saving.

All children born after 1 September 2002 who live in the UK are entitled to this account including Looked After Children.

To ensure that an account is open for all children being Looked After a monthly return is required from all local authorities. This has been the case since April 2005.


2. Who is Eligible?

Children born on or after 1 September 2002 are eligible for the Child Trust Fund if child benefit has been awarded for them, they live in the UK and they are not subject to immigration restrictions.

There are special rules for Looked After Children (see Section 7, Child Trust Funds and Looked After Children).


3. How does the Child Trust Fund Work and how much is it Worth?

For children born on or after 1 September 2002, a voucher worth £250 will be sent to the child benefit claimant.  A person with Parental Responsibility for the child can then open a Child Trust Fund account for that child with an approved Child Trust Fund provider, e.g. bank, building society etc.

If after a year, no one has opened an account, the Inland Revenue will open an account for the child.

A further voucher for £250 will be paid to the person with Parental Responsibility on a child's 7th birthday.

For children on low incomes and Looked After Children, £500 is paid on each occasion.


4. Can Additional Payments be made?

Anyone can contribute to a Child Trust Fund up to the sum of £1200 per year.

The Bradford Council will not contribute to the fund, but will facilitate such an investment by others. 


5. Who can Access the Money in the Child Trust Fund?

Only the child can withdraw money from the fund when he or she reaches 18.  No one else can touch it.

The money belongs solely to the child despite the fact that the person with Parental Responsibility manages the money until the child reaches 16.  Young people aged 16 and over can take over the management but cannot make withdrawals until they are 18.


6. Exceptions

In the case of terminally ill children, the person with Parental Responsibility can request permission to withdraw funds.


7. Child Trust Funds and Looked After Children

There are special rules for Looked After Children as child benefit is not payable to them whilst they are looked after. If a child benefit award is made for a child before he or she becomes looked after, he or she will be eligible for the fund account in the usual way.

Where a child becomes looked after soon after birth, the Inland Revenue will open a Child Trust Fund account for the child.

Even when the local authority has Parental Responsibility under a Care Order, they are not entitled to open or manage a Child Trust Fund account.  Where possible, the looked after child’s parents must be encouraged and helped to take on this responsibility.


8. Roles and Responsibilities of Local Authorities

Local Authorities must provide information about Looked After children to the Inland Revenue to ensure they receive their Child Trust Fund account by:

  1. Informing them of all children looked after on 6 April 2005 and born on or after 1 September 2002.
  2. Providing a monthly return of all new admissions between 6 April and 5 May and so on throughout the year
  3. Clarifying those situations where there are concerns about the capability/ appropriateness of the person with Parental Responsibility.

In Bradford these tasks are undertaken by the Performance Management section of Children’s Social Care


9. Parental Responsibility

The child’s parent is deemed eligible to mange the Child Trust Fund except in the following circumstances:

  • Where the child lives permanently away from the parent with no face to face contact (including children whose plan is for adoption);
  • Where there is a court order terminating their contact with the child;
  • Where the parent is deemed to have significant mental health problems
  • Where the child is lost and abandoned and where there is no prospect for reunification

NB In all cases where the decision is to exclude, legal advice must be sought


10. Social Worker’s Responsibilities

  1. As the aim of the Child Trust Fund is to help children & young people save for adulthood it is important children, their parents and carers are told of these arrangements by the social worker and encouraged to help children use their accounts purposefully.
  2. Where the child’s are unable to exercise parental responsibility with regard to the Child Trust Fund legal advice should be sought by the social worker.
  3. An adoptive parent or Special Guardian can manage their child’s Child Trust Fund account once they have formal parental responsibility for their child (usually when the Adoption Order / Special Guardianship order is made). The support worker is responsible for supporting adopter/Special Guardian in making an application to manage the Child Trust Fund.
  4. Ensuring parents know they are entitled to the money if their child dies or is terminally ill

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