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5.1.17 Child Trust Funds and Junior Individual Savings Accounts for Looked After Children

RELATED GUIDANCE

Statutory Guidance on Junior Individual Savings Accounts for Looked After Children

The Share Foundation

AMENDMENT

In June 2020, the annual allowance figures were updated.


Contents

  1. Child Trust Funds for Looked After Children
  2. Junior Individual Savings Accounts (ISAs) for Looked After Children


1. Child Trust Funds for Looked After Children

1.1 What are Child Trust Funds?

The Child Trust Fund is a savings and investment account designed to give children born on or after 1 September 2002 and on or before 2 January 2011 a financial start in life and to help teach them the value of saving.

New Child Trust Funds ceased in January 2011. Junior ISAs (see Section 2, Junior Individual Savings Accounts (ISAs) for Looked After Children) were designed to replace Child Trust Funds (CTFs) following the end of the CTF scheme.  No child can hold both a Child Trust Fund and a Junior ISA, but, with effect from 6 April 2015, funds can be transferred from a Child Trust Fund to a Junior ISA.

For children born on or after 1 September 2002 and before 1 August 2010, a voucher worth £250 was sent to the child benefit claimant, with a further £250 for children of families on low incomes. For children born between 2 August and 2 January 2011, the voucher was for £50, with a further £100 for children of families on low incomes. A person with Parental Responsibility for the child could then open a Child Trust Fund account for that child with an approved Child Trust Fund provider, e.g. bank, building society etc.

If after a year, no one had opened an account, the Inland Revenue opened an account for the child.

Children whose 7th birthday fell between 1 September 2009 and 31 July 2010 received an extra payment on their birthday of £250 (plus an extra £250 for low-income families/in care)

Anyone can contribute to a Child Trust Fund up to the sum of £9000.00 per year.

Until 30 September 2017, existing CTFs of looked after children were managed by the Official Solicitors for England and Wales and for Northern Ireland, and the Accountant of Court in Scotland. With effect from 1 October 2017 The Share Foundation administer the CTFs of certain looked after children in addition to managing the Junior ISA scheme.

1.2 Actions for the Local authority to Take in Relation to CTFs

Local authorities must:

  • On request from The Share Foundation, provide them with a named contact for dealing with all aspects of CTFs of looked after children;
  • Respond to requests for information from The Share Foundation, to enable them to identify and manage the relevant CTFs;
  • Ensure that there are effective and proportionate security arrangements safeguarding the integrity and confidentiality of the data to be sent to and received from The Share Foundation, in full compliance with the Data Protection Act 2018;
  • Once a CTF has come under the management of the Share Foundation ensure that, as an integral part of the care planning review and where it is appropriate to do so, the carer, parent and child are made aware of the account and that it is being managed by the Share Foundation;
  • Once a child stops being looked after, notify The Share Foundation and provide the necessary information to the person with parental responsibility for the child (and the child if 16 or 17 years old) so that they can take over the management of the CTF.

In addition:

Independent Reviewing Officers should ensure local authorities carry out their duty as good corporate parents so that, where appropriate, children and their carers, parent, and/or responsible adult, receive suitable advice about their CTF account, both while they are looked after and when they cease to be looked after.


2. Junior Individual Savings Accounts (ISAs) for Looked After Children

2.1 What are Junior ISAs?

In November 2011, the Government announced a new scheme to support long-term savings for Looked After children. Those who did not previously benefit from a Child Trust Fund (CTF), and had been Looked After for 12 months or more, received a £200 Government payment into a Junior Individual Savings Account (Junior ISA).

Looked After children born between 1 September 2002 and 1 January 2011 have previously received support for their long-term savings through the Child Trust Fund (CTF). Junior ISAs were designed to replace CTFs following the end of the CTF scheme. No one can hold both a CTF and a Junior ISA. With effect from 6 April 2015, funds can be transferred from a Child Trust Fund to a Junior ISA.

Junior ISAs provide a tax-free way to save for under 18s. The money in a Junior ISA belongs to the child, but they can't take the money out until they are 18.  At this age, the account will mature into a standard (adult) ISA.  Because savings are locked into the account until the account holder's 18th birthday, Junior ISAs are for building long-term assets, rather than day-to-day savings.

Anyone can pay money into the accounts. The total limit for payments into Junior ISAs is £9000.00 in each tax year.

2.2 Eligibility for Junior ISAs

Children are eligible for a Junior ISA if they are under 18, resident in the UK, and either:

  1. Not eligible for a CTF (i.e. were born before 1 September 2002 or after 1 January 2011); or
  2. Their previous Child Trust Fund has been converted into a Junior ISA.

2.3 Actions for the local authority in relation to Junior ISAs

Unless there are exceptional reasons that justify a variation, local authorities must:

  • On request from The Share Foundation, provide them with a named contact for dealing with all aspects of the Junior ISA scheme;
  • Respond to requests for information from The Share Foundation, to enable them to open the Junior ISAs and draw down the £200 payments;
  • Ensure that there are effective and proportionate security arrangements safeguarding the integrity and confidentiality of the data to be sent to and received from The Share Foundation, in full compliance with the Data Protection Act 2018;
  • Once an account has been opened, ensure that, as an integral part of the care planning review and where it is appropriate to do so, the carer, parent and child are made aware of the account;
  • Once a child stops being looked after, notify The Share Foundation and provide the necessary information to the person with parental responsibility for the child (and the child if 16 or 17 years old) so that they may take over the management of the account.

In addition:

Independent Reviewing Officers should ensure local authorities carry out their duty as good corporate parents, so that children who are eligible for a Junior ISA receive funding and, where appropriate, they and their carers and parents receive suitable advice about their accounts, both while they are looked after and when they cease to be looked after

End