Changes to the Child Trust Fund
One of the initial announcements by the new coalition Government explained how there will be significant revisions to Child Trust Funds (CTF) arrangements.
The Government plans to introduce secondary legislation which will make significant changes to CTF payments from 1 August 2010. From that date the 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. The Government plans to introduce primary legislation from 1 January 2011 which will cease all CTF payments. Additional payments for disabled children will continue until the end of this year.
As part of this announcement, HMRC also released a Q&A document which contains some further information in relation to the proposed changes. For example, the Government do not plan to make any changes in relation to additional contributions by a CTF holder’s family and friends. It is expected that the existing measures for additional contributions will remain in place.