The government?s recently introduced Child Trust Fund has attracted much attention but is not universally understood. money4dentists explains the essentials, and the benefits, of this new, state-sponsored savings scheme for children.Against a background of encouraging saving throughout the population, and to teach children the value of regular investment, the government will award a voucher worth ?250 to every child born after 1st September 2002 providing the family is already receiving Child Benefit. If the family is receiving the maximum Child Tax Credit they will receive up to ?500 per child.
Vouchers, accompanied by an information pack, are currently being distributed to all qualifying families. The voucher must be invested in one of a number of Child Trust Fund accounts, and can be cashed in, free of all tax on capital growth or interest, when the child reaches the age of 18. Additional payments may be made into the account, not exceeding ?1,200 in any one year, at any time, and these additional payments will also be free from income and capital gains tax.
There are three categories of provider to enable easy investment, these include: Banks, building societies and life offices, high street stores such as Mothercare or investment firms such as F & C all provide Child Trust Fund services, with the ability to transfer the Child Trust Fund to another provider at any time without charge.
Over the lifetime of each Child Trust account investment information will be provided for both the child and its parents to promote better understanding of prudent financial management. All children eligible will also receive a further Child Trust Fund payment at age 7 of ?250 with children from lower-income families receiving ?500.
The Child Trust Fund Helpline can be contacted on 0845 302 1470 or visit the website www.inlandrevenue.gov.uk/ctf
For more comprehensive information on Child Trust Funds or for grown-up tips on how to manage your money, or for advice on any financial matters, call money4dentists on 0845 345 5060 or visit www.money4dentists.com
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