HMRC has issued a fresh warning urging young adults to check for unclaimed Child Trust Funds (CTFs), revealing that approximately 758,000 people aged 18-23 have accounts that have not been claimed. The average value of a CTF is £2,200, according to HMRC, meaning that billions of pounds could be sitting unclaimed. Anyone born between September 1, 2002 and January 2, 2011 could have a CTF waiting to be claimed once they turn 18, HMRC said. The money is not a loan or benefit; it belongs to the account holder and is tax-free.
Child Trust Funds were introduced by the Labour government in 2005 for children born between 1 September 2002 and 2 January 2011, according to multiple reports. Each child was given £250 from the government to launch the account, with an additional £250 for low-income families or those in care. If an account was not opened by a parent within 12 months, HMRC opened one on their behalf. Parents or guardians could also add more money over time, and the funds grow tax-free until the child turns 18.
HMRC is set to send letters to young people about their CTF pots for the first time, according to This is Money. Anyone aged 21 who hasn't claimed their money can expect to get a letter, multiple reports indicate. The letters will include information on how to locate and access the funds. This outreach marks a significant step by HMRC to reunite account holders with their savings.
Young people in northern England are disproportionately affected by unclaimed savings, according to The Share Foundation. The foundation has uncovered a significant geographical disparity in forgotten CTF accounts, with higher concentrations in northern regions. The reasons for this disparity are not fully understood, but it may reflect differences in financial awareness or mobility among families.
Many families have moved, changed banks, or simply forgotten about old accounts, leading to unclaimed money, according to research. Parents often opened these accounts years ago but didn't share the details with their kids; over time, papers were lost or forgotten. Young adults who are now 18 may have had access to these funds for years but haven't withdrawn any, possibly because they are unaware of the accounts.
There are growing calls for funds to be automatically released to account holders when they turn 21, according to experts. Currently, account holders must actively claim their money, which can be a barrier for those who have lost track of their accounts. Automatic release would require legislative changes, and it remains unclear whether the government plans to pursue this option.
There is a discrepancy in the reported age range of account holders with unclaimed CTFs. Approximately 758,000 people aged 18-23 have unclaimed accounts, according to multiple reports. However, other reports state that more than 750,000 forgotten CTFs are owned by those aged 15-24. This discrepancy affects who is being targeted by HMRC's letter campaign and the total number of eligible individuals. If your parents contributed regularly, the amount could be much higher than £2,200, according to research.
Several unknowns remain. It is not clear how many letters HMRC has actually sent out, or when recipients will receive them. The exact geographical breakdown of unclaimed CTF accounts by region has not been disclosed. The total number of unclaimed accounts, beyond the estimated value, is also unknown. Whether HMRC will automatically release funds at age 21, or whether legislation is required, remains uncertain. Finally, the total amount of money in accounts that have been claimed versus unclaimed has not been quantified.