Child Trust Fund (CTF) savers who did not make full use of their allowance last year have wasted up to £63million in tax breaks, Unbiased.co.uk has revealed.
It has found that just under a quarter of the Child Trust Fund accounts opened since 2005 have received additional deposits, while only one per cent of accounts have received the maximum amount of funding each year.
The professional advice website suggests that if only half of the Child Trust Funds that received no additional funding had been topped up to the maximum amount, the additional tax saving would have equated to £63million.
Since their launch in 2002, Child Trust Funds – which can be opened by family and friends – have been designed to provide a sizable which can be withdrawn when the child turns 18.
To kick-start the fund, the government issues parents with a £250 voucher, whilst a maximum of £1,200 can be saved each year. However, Unbiased.co.uk has discovered that since their introduction, 28 per cent of eligible children have not had a Child Trust Fund account opened for them.
Encouraging parents to start saving for their child's future, Karen Barrett, chief executive of Unbiased.co.uk 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.
"Parents don't have to pay tax on the interest earned on a CTF account and by not using their full funding allowance each year they may potentially be gifting the taxman more money than necessary."
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