Millions of teenagers are in the money

Young people turning 18 from this month have had a difficult 2020 due to being unable to sit exams or enjoy the summer with their friends. 

But they do have a financial boost to look forward to as they will be able to withdraw money from Child Trust Funds for the first time.

Children born from September 2002 were given vouchers by the then Labour government to invest for the future with the money only accessible at the age of 18. 

Those savings pots could now be worth more than £1,000 – or greater if family and friends added contributions.

Set up to encourage parents to save for their children, the idea was for young people to have some savings at the age of 18 to help with costs such as further education funding or leaving home and living alone for the first time.

The government initially put £250 into the tax-free account during a child’s first year then added another £250 when they turned seven. 

For lower income families, the payment was £500. Others could also contribute to the account up to set limits.

The scheme was watered down then scrapped completely by the coalition government in 2011.

Every month around 55,000 people turn 18 and eventually a total of about 6.3 million people will be able to redeem the money, or continue to save, according to HMRC.

From the age of 16 teenagers can take control of their account but they can only withdraw money from it at 18.  For those who wish to sit on their nest egg, the Child Trust Fund provider will move it into a tax-free individual savings account.

HMRC admits that in potentially many thousands of cases, youngsters will have no idea that they have such savings.

However, there is help at hand if you are unsure how to access the money.

Child Trust Funds can be found using the user friendly Government Gateway service, which requires a login or registration. The fund unique reference number or national insurance number is also needed.

More information on Child Trust Funds is available on through the government-backed Money and Pensions Service and The Share Foundation charity runs a free finding service.

Happy hunting!