The government has created a new initiative to encourage parents and children to save called the Child Trust Fund. Every child awarded child benefit, born on or after 1 September 2002 that lives in the UK will be eligible for the fund.
Depending on the date of birth of the child at least £250 is awarded, this is doubled for families receiving the full amount of Child Tax Credit. Parents deposit the voucher in a participating account and can deposit up to an additional £1200, the account is completely tax free. The government pays a further contribution when the child reaches 7 years old, again this will be increased for families claiming the full amount of Child Tax Credit.
The child is able to gain access to the funds on their 18th birthday; this ensures that they have some savings when they start their adult life.
Parents claiming child benefit do not have to do anything to apply for the fund, packs are automatically sent out. Further information can be found on the government site www.childtrustfund.gov.uk.