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One Million Teenagers Fail to Claim Child Trust Fund Money – After HMRC Steps Away from Notifying them of the Cash

A report by the Commons’ Public Accounts Committee says more should be done to help young adults trace their funds

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Nearly one million young adults have failed to claim money owed to them from child trust funds set up by the Labour Government when they were babies and toddlers – after HMRC stepped away from notifying people of when this money is available to them, a new report by MPs has found.

Some £1.7 billion has not been claimed by people and is lying in funds set up by banks and financial organisations, which are making between them about £100 million a year from administrating the scheme. MPs were told charges on the accounts which track the stock market were very high for fund management.

Child trust funds – on average now worth about £1,900 tax free for each young adult – were set up by then Chancellor Gordon Brown in 2005. Eligible parents were sent a £250 voucher to invest in stocks and shares funds with the aim of creating a nest egg for the young adult when they reached 18. The scheme was backdated to 2002 but was dropped in 2011 by the Conservative-Liberal Democrat Coalition Government.

Labour’s Dame Meg Hillier, chair of the Commons’ Public Accounts Committee, said: “The aims behind child trust funds are laudable – for young people to come into a pot of money on reaching 18, with the promotion of financial literacy and good savings habits. But many young people are unaware that they have money waiting to be claimed. Schemes like these need careful planning so that they are not forgotten at the point when they mature.”

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She said that the committee heard that a “world of difference” can be made to young people, particularly those leaving care, through the scheme and that, in an ongoing cost of living crisis, “our young people need every bit of support we can give them”.

“HMRC still has time to make sure that CTFs are given the chance to be the boost to young people’s futures which they were designed to be,” the MP added.

The report highlights a specific problem among the estimated 42% of 18 to 20-year-olds who should have claimed the money. Many are from low income families – amounting to 887,000 or half the accounts. They have either lost the original documents or are unaware how to claim the money.

Some 126,000 must have a family or carer apply for legal authority to access and manage these funds on their behalf. But the Court of Protection approved only 15 such applications during 2021. 

The problem is that no provision has been made by HM Revenue and Customs to notify people when their money is available. Instead, a voluntary system was set up by a charity, The Share Foundation, and the commercial organisation, The Tracing Group, to create a register. But only four out of 55 financial organisations running child trust funds joined.

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The committee is critical of HMRC for failing to monitor the scheme from 2013 and for having outdated figures on who is claiming the money. It has said more should be done to help the young adults by giving support to financial organisations to trace the accounts’ owners.

On HMRC, the report says: “It claims there is no ‘particular appetite’ for further evaluation. It told us that only ministers can decide if an evaluation of the scheme should be undertaken, with which we disagree.”

A spokesperson for the department told Byline Times: “Every 16-year-old is sent information about finding their child trust fund with their national insurance letter. We also regularly remind people how to check if they have an account.

“The banks and building societies managing the funds are also responsible for communicating with account holders. We would encourage anyone unsure about their situation to get in touch with their bank or building society as well.

“People can easily locate their Child Trust Fund accounts online by using the ‘find my CTF’ page on GOV.UK.”

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