Child Trust Fund – draft legislation
New draft legislation has been published to implement the coalition Government’s plans to significantly reduce and eventually cease payments into the Child Trust Funds (CTF) which were introduced by the last Labour Government.
The legislation will make significant changes to CTF payments. The payments for babies born after 1 August 2010 will be reduced from £250 to £50 for better off families, and from £500 to £100 for lower income families. In addition, the second CTF payment for children who reach the age of 7 on or after 1 August 2010 will be stopped. Additional payments for disabled children will cease on 5 April 2011.
The Government does not plan to make any changes in relation to additional contributions by any existing CTF holders’ 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 operative dates may be postponed if the draft legislation is not passed before the end of the current session of Parliament.