Transferring a Child Trust Fund (CTF) into a Junior ISA account

Information to help you decide what is right for your child’s future.

The value of investments, and the income from them, will fluctuate. This will cause the fund price to fall as well as rise and you may not get back the original amount you invested. Junior ISA tax rules may change in the future and Junior ISA tax advantages depend on your individual circumstances.

We are unable to give financial advice. If you are unsure about the suitability of your investment, speak to your financial adviser. The views expressed in this document should not be taken as a recommendation, advice or forecast.  

Q: What are the changes to Child Trust Fund (CTF) regulations?

A: From 6 April 2015 the Government allowed savings held in a CTF to be transferred to a Junior ISA account.

Q: Do I have to transfer my CTF into a Junior ISA?

A: No, you do not have to transfer your child’s CTF into a Junior ISA. From April 2015 onwards you simply have the choice to do so.

Q: What are the main features of CTFs and Junior ISAs?

A: CTFs were designed as ‘locked-in’ accounts and, in most cases, CTF funds, and likewise Junior ISAs, cannot be accessed until account maturity, when the account holder reaches the age of 18. Therefore it is usually not possible for funds held in a CTF to be withdrawn, or for these funds to be transferred to any non-CTF account. However transfers of funds between different CTF accounts and CTF providers are permitted.

Following the end of new CTF applications the Government established the Junior ISA as a successor account. This account is in many respects identical to the CTF. However, one of the major differences between the two accounts is that, in most cases, Junior ISAs do not receive government payments.

Junior ISAs were designed to provide a simple, transparent, accessible and competitive savings product for children who do not have a CTF, as children who are eligible to hold CTFs are not permitted to also hold a Junior ISA, and to encourage families to save more for their children than they otherwise might (within the investment limits).

At present, the funds held in a Junior ISA can be automatically rolled into an ‘adult ISA’ on maturity (when the account holder reaches the age of 18), outside the normal ISA subscription limits. While this is not currently the case for CTFs, the Government intends to legislate, in good time before the first accounts mature, to provide that funds held in a CTF on maturity can remain tax advantaged after maturity, and may be rolled into an ISA outside the normal subscription limits – as is the case for Junior ISA funds.

Junior ISA tax rules may change in the future and Junior ISA tax advantages depend on your individual circumstances.

Q: Why has the Government made these changes?

A: These changes have been implemented as a direct result of a Consultation by HM Treasury in 2013, in which the Government states that it is “…committed to supporting savings and ensuring that families have access to suitable tax-advantaged savings products that allow them to save for their children’s futures in a clear and simple way.”

The Government believes that parents will have a greater range of options with Junior ISAs, as these are currently offered by a wider range of providers than CTFs.

ISA tax rules may change in the future. ISA tax advantages depend on your individual circumstances.

Q: Why should I consider transferring my child’s CTF into a Junior ISA?

A: We believe that this change in regulation offers greatly improved choices to parents and guardians looking to achieve the best long-term outcome for their child’s finances, as far fewer savings providers offer CTFs than offer Junior ISA accounts. A greater number of providers to choose from means savers have a greater choice of minimum contribution levels, account charges and underlying assets held within the Junior ISA, for example; equities, bonds, property, multi asset, or cash. Unlike CTFs, Junior ISAs also allow parents and guardians to choose actively managed or passive/tracker investments according to their appetite for risk versus return and their child’s individual financial needs.

Junior ISA tax rules may change in the future and Junior ISA tax advantages depend on your individual circumstances. The value of investments, and the income from them, will fluctuate. This will cause the fund price to fall as well as rise and you may not get back the original amount you invested.

Q: Will I lose my Government contributions if I transfer into a Junior ISA?

A: No

Q: Can I keep my CTF with my current provider and open a Junior ISA account too?

A: No, under current regulations you can still only hold either a CTF or a Junior ISA for each child. If you would like to open a Junior ISA account for a child who currently holds a CTF you will need to transfer it into a Junior ISA.

Q: Will it cost me to transfer my CTF into a Junior ISA?

A: Some CTF providers may charge you to transfer your account elsewhere. To find out more please contact your existing CTF provider. However M&G will not charge you to transfer your CTF into The M&G Junior ISA. Please be aware that whilst your investment is being transferred it will be out of the market for a short period of time and will not lose or gain in value.

Q: How can I find out more about Junior ISAs and whether or not they are right for
my child’s long-term savings?

A: For impartial advice about transferring into or investing in a Junior ISA account we recommend you speak to a financial adviser.

Q: How do I transfer my CTF into The M&G Junior ISA?

A: Follow these three simple steps to transfer your CTF into The M&G Junior ISA.

Source of CTF to Junior ISA transfer information: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/198726/
child_trust_fund_consultation_on_allowing_the_transfer_of_savings_from_a_ctf_to_a_junior_isa_140513.pdf

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