Parents waste £63m in child trust fund tax breaks
Wednesday, 24 February 2010 10:47
By myfinances.co.uk staff
Parents across the UK are wasting £63 million in tax breaks by not taking full advantage of the annual allowance for child trust funds (CTFs), according to new research.
The report by Unbiased.co.uk found that 24 per cent of CTFs opened since 2005 have received additional deposits on top of the government's initial £250 contribution, with just one per cent getting the maximum funding.
If half of the accounts that received no funding had been topped up with the full £1,200 allowed, the resulting tax saving would top £63 million, the company said.
All children born on or after September 1st 2002 are eligible for a CTF. Parents receive a £250 voucher to open an account of their choice for their child. If they do not use this voucher within 12 months, a fund is automatically set up by HM Revenue & Customs.
According to Unbiased.co.uk, of the 4.3 million vouchers issued since CTFs were introduced, parents have used 3.1 million.
The company's chief executive, Karen Barrett, said: "The government introduced child trust funds as a way of helping parents plan for their children's futures. However, our research has shown that parents are not making the most of this opportunity."
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