By Emily Caulkett-
A staggering 430,000 young adults aged 18 to 21 are being urged to lay claim to an estimated £2,000 each in unclaimed Child Trust Funds, as HM Revenue and Customs (HMRC) champions UK Savings Week from September 18 to 24, 2023.
Child Trust Funds represent tax-free, long-term savings accounts established for every child born between September 1, 2002, and January 2, 2011.
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In July, it was revealed that barriers in accessing funds for children and young people lacking mental capacity as money fails to reach many it was designed to help.
Providers earning up to £100m a year in profit off savings mostly composed of Government money – with some not doing enough to link the funds with their owners
The government initiated these accounts with an initial deposit of at least £250. Once a child reaches the age of 18, the funds are available for withdrawal.
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In order to address the urgency of this issue, HMRC is reaching out to young adults who may be starting their first jobs, apprenticeships, or university studies, or taking the leap into their first homes.
Angela MacDonald, HMRC’s Second Permanent Secretary and Deputy Chief Executive, emphasized the importance of tracking down these accounts, stating, “It could make a real difference to their future plans.”
A recent survey conducted by UCAS among first and second-year university students indicated significant interest in the Child Trust Funds. Survey results revealed that 43% of students were most eager to learn the value of their accounts, while 32% sought information on how to claim these funds.
Astonishingly, 60% of students relied on their parents as their primary source of information regarding Child Trust Funds.
Among the 5.3 million open Child Trust Fund accounts, young people aged 16 or older can assume control of their own account, but the funds can only be accessed upon turning 18.
Since the inception of the scheme, over 500,000 matured Child Trust Fund accounts have been claimed or transferred into Individual Savings Accounts (ISAs), starting from September 2020 when the first cohort of children reached 18 years old.
Child Trust Funds continue to accept annual tax-free contributions of up to £9,000 until the account matures. The deposited money remains in the account until the child decides to withdraw or reinvest it elsewhere.
UCAS survey findings revealed that 74% of respondents were aware of Child Trust Funds. Additional insights from the survey included the following:
Greater awareness among 19-year-olds (78%) compared to those aged 20 to 21 (71%).
A notable 76% of respondents who had yet to claim their Child Trust Funds expressed a likelihood of taking steps to learn how to withdraw the funds.
Young Enterprise is a national charity who specialize in Enterprise Education and Financial Education and are a trusted and valued provider of knowledge, resources and training to anyone teaching young people how to manage money.
Young Enterprise works directly with young people, teachers, and volunteers, with the support of corporate partners, to build a successful and sustainable future for all young people.
Young Enterprise’s vision is to ensure that every young person is provided with the opportunity to learn the vital skills needed to earn and look after their money. Any investment to improve young people’s financial literacy not only pays huge dividends to their lives, but their families, their communities and to wider society.
Sharon Davies, CEO of Young Enterprise, encouraged all young people to explore the possibility of unclaimed funds in their Child Trust Funds and to use them prudently.
She emphasized the importance of financial education and planning from a young age, pointing out that many unclaimed funds are held by young people from disadvantaged backgrounds who stand to benefit immensely from these resources.
The unclaimed money in Child Trust Funds has the potential to be life-changing and underscores the significance of financial education and awareness for young adults across the UK.
As UK Savings Week unfolds, many hope that more young people will seize this opportunity to secure their financial future.
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