Child Trust Funds 101

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Few people know what a child trust fund is and even fewer take advantage of this great investment. Here we aim to cover the basics

Child Trust Funds can be a mine field to navigate though. Here are ten simple

things to know about Child Trust Funds before taking one out.

1. While similar to ISAs, child trust funds are designed to help children in the long term. They are a government backed, tax free saving scheme.

2. Parents only receive their child's CTF voucher once he or she has been registered for Child Benefit. As such, a birth certificate is required. Remember, Child Benefit is available to every child, regardless of parental income.

3. Once you have the voucher, time is money. It makes sense to begin taking advantage if a Child Trust Fund as early as possible. So get reading.

4. You can find full details about the scheme at the government's Child Trust Fund site here http://www.childtrustfund.gov.uk/

5. Children gain full access to their CTF when they turn 18.

6. The pre-budget report indicated that you'll be able to roll a CTF into an ISA, once it matures, meaning that your child's money could benefit from the tax free status for many years.

7. Child trust funds and usually be transferred between providers at will and at no incurred cost.

8. If you don't invest the voucher within 12 months, the government will open a stakeholder account for you.

9. Parents, friends and relatives can top up a Child Trust Fund by a maximum of £1,200 per year (£100 per month).

10. If your oldest child is eligible for a CTF, and you were to pay just his/her Child Benefit into the account, it would equal a contribution of around £907 to the account per year, or £75 per month. Subsequent children could contribute £608, or around £50 per month.

Another important point to remember is that money invested in a CTF is not subject to the £100 rule. Normally, if a child earns any interest over this sum on money given to him or her by a parent, the parent is taxed on it at their highest rate. This does not apply to the CTF, meaning that your child could save the maximum £1,200 per year, whilst saving elsewhere, too.

Article Source: http://depositarticles.com/

Give your child a head start by saving for their future with an ASDA Child Trust Fund, a name you know and trust.

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