Changes to the Child Trust Fund (CTF)
HMRC have published further details on the Government’s plans to reduce and ultimately cease making CTF payments. With effect from 1 August 2010, CTF payments at birth will be reduced from £250 to £50 for better off families, and £500 to £100 for lower income families. In addition, the second CTF payment for children who reach the age of 7 will be stopped for children whose 7th birthday falls after 31 July 2010.
There are special payments for annual payments for children entitled to Disability Living Allowance (DLA). Under the Government’s proposals no payments will be made into the CTF for DLA entitlement of any kind in the tax year 2011/12 onwards.
From 1 January 2011 all CTF payments will cease and children born after the end of this year will not qualify for any payments.
The Government do not plan to make any changes in relation to additional contributions by an existing CTF holder’s family and friends who will remain able to contribute up to an overall total of £1,200 a year. It will also still be possible to change the type of account and/or move it to another provider.
The changes will require legislation to be passed by Parliament. Until then the current CTF rules will apply.