Only 71% of new parents have opened a CTF account for their children since their introduction in April 2005 according to a recent study by Unbiased.com, and are chalking up an astonishing £125 million of wasted tax breaks for 2007.
The figures come after Unbiased.co.uk, a website offering independent financial advice, found that less than three quarters of eligible children have had CTFs opened on their behalf. In addition, less than half of the accounts opened since 2005 will make use of the £1,200 funding allowance allotted per year.
David Elms, Chief Executive of Unbiased.co.uk comments: “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.”
“Since we launched TaxAction fifteen years ago, we have seen a steady increase in the amount of tax we throw away. This year’s report shows we waste £7.9 billion, the highest since the campaign began. People who want to reduce the amount they waste should visit an independent financial adviser who can show you how to become tax savvy with your finances.”
CTF vouchers can be claimed within the first twelve months of a child’s life and can be invested in cash or equities with a range of different risk profiles.
Learn more about Child trust Funds