Kid's cash
Martin Lewis gives urgent warning for parents as millions of kids miss out on lost £2,000 in savings – how to claim
MARTIN Lewis has issued an urgent warning to parents as millions of kids are still missing out on £2,000 in savings.
The MoneySavingExpert.com founder issued the warning to parents about the possible missing cash in his latest newsletter.
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Martin explained parents could be up to one of the million people who have a hidden £2,000 in lost Child Trust Fund savings.
Child Trust Funds (CTF) are savings accounts for children born between September 1, 2002 and January 2, 2011.
All children who had accounts set up automatically received a £250 voucher at birth, and lower income families would have got £500.
Children born between 2002 and 2010 would have received an additional £250 when they turned seven.
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You can add extra money to a fund and parents can also decide whether to invest the cash in stocks and shares or save it until the account can be opened.
CTF savings are locked away until the child turns 18 - and many of these recipients will be reaching that age now - but many don't even know they have one.
Martin wrote: "Of 6.3million active CTFs, it's thought 100,000s are 'lost' meaning you mightn't know you have one, or don't know where it is.
"The average CTF is now worth £2,100 after investment growth, according to HM Revenue & Customs - yet my suspicion is lost ones are likely worth less, so I'm going to take a punt at £1,000 - still, real money!"
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Martin explained that if you already know about your CTF then that's great, but if your child was born between the dates above, then it is really important you check.
Parents or guardians of the child can check for them, or if they're over 16 then they can do it themselves.
Parents will generally need their National Insurance number or their government gateway to do it online, but there is an option to do it by post.
Martin then encouraged readers to do this handy trick to get your child even more money, only if they're under the age of 18 and therefore can't access the cash.
This is so you know how you can access it and when.
He added: "Under 18? Ensure your Child Trust Fund pays max interest.
"Whether you know about your CTF or have just located it, CTFs are now dead accounts - you can't open a new one - so there's little competition and interest rates can be low - check yours.
"But you can convert it into its successor product, a top junior ISA, which can pay up to 3.8%."
This will help you and your child earn more cash on your savings as you'll have higher interest.
"Within the application form for the junior ISA there'll be a section to ask to transfer CTFs (or other junior ISAs) across.
"Shares-based CTFs can be transferred into a shares junior ISA too."
He then said: "Had a Child Trust Fund and now 18 - what happens?
"If you do or did nothing, your cash CTF likely automatically becomes a cash ISA (not a junior one), investment CTFs likely become investment ISAs - unless your firm doesn't offer those.
"Yet you don't want this sorted by default and you may want to spend some of it, so actively ensure your money is in the right place for you."
Martin also posted a video along with the information that explains it in more detail.
How do I find a lost Child Trust Fund account?
A CTF can be claimed when the account-holder turns 18.
The money will stay in the account until you withdraw or transfer it.
You can find an old CTF by contacting the Child Trust Fund provider directly.
If you don't know who your provider is, you can ask HMRC to locate it for you on the government's website, but you'll need some details on hand.
This includes your government gateway login and National Insurance number.
What can you do once you've claimed the money?
You don't have to spend the CTF once you've claimed it and you have some options.
Cash it in
You can ask your CTF provider to hand over the money and get it paid into a bank account.
Transfer it into an ISA
You can transfer it into an Individual Savings Account (ISA).
You don't pay tax on the interest you earn with an ISA.
You can transfer the money into a cash ISA - although the interest rates on these are typically lower than a standard savings account.
Or, you can transfer it into a stocks and shares ISA, which lets you invest the money.
A good option for young people saving to buy their first home is the Lifetime ISA.
You can put £4,000 a year into these accounts.
The government will give you a 25% bonus on your savings as long as you use it to buy your first property, or if you wait until retirement age to access the cash.
Do nothing
If you do nothing with your CTF, your provider will either transfer it to an ISA or to a "protected account".
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It won't incur income or capital gains tax and will sit until the account holder does something with it.
This isn't a great option though as your money won't be earning interest, which means its value in real terms is being eroded by inflation every year.
Do you have a money problem that needs sorting? Get in touch by emailing [email protected]
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