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Child trust fund

This is not a tax credit. This new measure (sometimes nicknamed “baby bonds”) provides every child born from September 2002 with an initial endowment at birth of £250, rising to £500 for the poorest families. It is designed to help strengthen the saving habit of future generations.

The Child Trust Fund (CTF) will be introduced to benefit children in the UK by:

  • providing an initial endowment at birth for every child of £250, rising to £500 for children from low-income families who also qualify for full Child Tax Credit
  • allowing additional contributions to be made by parents, family members and friends, up to an annual limit of £1,000
  • being accessible when children reach 18 years of age, whereupon there will be no restriction of the use of assets
  • being delivered through open market competition, with accounts expected to be available by 2005, enabling a wide range of authorised providers to offer the CTF.

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