HMRC issues warning to parents over £350 fee and says 'do not pay it'

HMRC says 671,000 people up and down the country aged 18 to 22 have a child trust fund account that has matured, and worth £2,082 on average, and is sitting unclaimed.

HMRC has urged parents to come forward for £2,082 each. HMRC says 671,000 people up and down the country aged 18 to 22 have a child trust fund account that has matured, and worth £2,082 on average, and is sitting unclaimed.

An eye-watering £10bn is estimated to be sitting in child trust fund accounts. The tax department spoke out and said: “We want to reunite young people with their money, and we’re making the process as simple as possible.”

But HMRC has warned to be aware that there are third-party companies advertising their services online who say they can help to track down people’s accounts, because they will likely charge mums and dads to access the pots.

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HMRC says it found one asking for up to £350 or 25% of the value of the account. Many CTF providers are charging “huge sums” for managing the accounts, eating into people’s money, says Charlene Young, a savings expert at the investment platform AJ Bell.

“The report indicates many accounts are charging 1.5% annually for a portfolio of passive funds, whereas a junior Isa on a modern platform might cost around 0.25%, plus the cost of a tracker, which can be as little as a few basis points,” she added.

You can continue to add up to £9,000 a year to an existing Child Trust Fund account. The money belongs to the child and they can only take it out when they’re 18. They can take control of the account when they’re 16, HMC says.

There’s no tax to pay on the Child Trust Fund income or any profit it makes. It will not affect any benefits or tax credits you receive. A Child Trust Fund is a long-term tax-free savings account for children born between 1 September 2002 and 2 January 2011.