HMRC Warns 18-Year-Olds About Potential Access to Thousands of Pounds

HMRC has issued an alert to parents with teenagers, as their Child Trust Fund will mature the day they turn 18. This tax-free savings scheme was set up for youngsters born between 1 September 2002 and 2 January 2011.

The tax authority posted on X: 'Attention parents! If your child has recently turned 18, they may have a #ChildTrustFund, worth an average of £2,200.'

Parents can pay up to £9,000 each year into existing Child Trust Funds, but only the child can access the cash once they hit 18. They can take charge of the account from age 16.

When the child reaches 18, the fund reaches maturity, meaning no additional cash can be added. The young person can withdraw the money or move it to an adult ISA, at which point the fund account will shut down.

But until the youngster takes either of these steps, the cash will sit in the account untouched, as nobody else can get to it. If you think you have a forgotten account, you can use the Government's tracking tool to locate your Child Trust Fund.

To find a Child Trust Fund, HMRC can reveal where the account was originally established, provided you are a parent or guardian of a child under 18 who holds a Child Trust Fund or the individual for whom the account was created and is at least 16 years old.

To locate a Child Trust Fund, you'll need to supply HMRC with the National Insurance number, full name, address, date of birth and any previous names of the child for whom the account was opened. After providing this information, you should receive a letter from HMRC within three weeks containing the details of the Child Trust Fund provider.

However, if the account is for an adopted child or a child for whom you were granted parental responsibility by a court, you may need to provide additional information to HMRC. The specifics will be outlined in a follow-up letter after your request to locate the account.

If the child lacks the mental capacity to manage their account upon maturity, a close friend or relative will need to apply to the Court of Protection for a financial deputyship order to manage the funds on their behalf.

When the Child Trust Fund scheme was first launched, the government initially contributed £250, with an extra £250 paid to children from low-income households or those in local authority care. This changed for children born on or after 3 August 2010, who received £50 from the government into their funds, or £100 if they were from low-income households or in local authority care.

In 2011, the government introduced Junior ISAs, which offer tax-free savings for children. However, there are no further contributions from the government to these accounts, except for children in care.