this is the Selftrade logo

Eligible children (those born between 1 September 2002 and 2 January 2011) receive a voucher from the Government to invest in a Child Trust Fund. It's all aimed at giving them a good financial start to their adult life.

For those eligible to take advantage of the scheme, the real power behind building up a useful sum for when your child turns 18 comes from adding to their Fund - either lump sums or on a regular basis. You, your family and friends can all contribute to your child's account - up to a total of £3600 a year (birthday to birthday) - it is a gift that really has the potential to grow as fast as they do!

CTF annual subscription limit from 1 November, 2011

The CTF contribution limit rises to £3,600 from 1 November 2011. This relates to the ‘subscription year’ which, for CTFs runs from birthday to birthday rather than tax year. You can contribute to the higher amount in your current ‘subscription year’ but not until the increase takes effect on 1 November.

For example: for a child whose birthday is 10 June: the current ‘subscription year’ runs from 10 June 2011 to 9 June 2012. So you can contribute £1,200 before 1 November 2011, and a further £2,400 on or after 1 November 2011 until 9 June 2012.

Whilst the intention is for CTFs to migrate to become Junior ISAs, there are currently no timescales as yet for them to do so: HMRC will address this at a later date.

Once added to the account, the money belongs to the child but can only be withdrawn at age 18.

Growth in the value of your child's investment is free of capital gains tax. Income Tax will, where applicable, have been deducted at source on dividends paid to you and cannot be reclaimed but there's no further liability to income tax on investment income. Any interest on a cash balance in your CTF account will be paid gross, without the deduction of income tax.

Of course, investing introduces a higher degree of risk than just putting cash into a savings account: investments aren't the right thing for everyone because when you invest you can lose money as well as gain. But by spreading your investments, and choosing only those that suit your aims and objectives, you can get that right balance between risk and return. Our free investment selection tools will help you make your choices. If you are in doubt about investing in any particular investment, or not sure which account is most appropriate for your child, we recommend you consult a financial adviser.

Opening your child’s CTF account

Once you’ve received your CTF voucher, the sooner you act the sooner you can start growing a fund for your child.

If you haven’t used your vouchers to open an account within 60 days of issue, the Government will allocate your child’s account to one of a number of CTF providers. You can transfer your account to another provider … and there are no charges for doing so (although you may need to sell any investments held in the account at the time of transfer), but to avoid this, make a pro-active choice before the deadline and choose the right service for your child’s future.
We've a choice of accounts to help you make the most of your child's Fund: each gives you a way to invest in the stock market for the potential growth that it offers.

After discussion with providers and the Treasury, HMRC has issued the final regulations for the new Junior ISA, which is a hybrid product, sharing features of both a CTF and an ISA. We welcome the new Junior ISA proposals and are currently reviewing the opportunity and systems implications but, like many other CTF and ISA providers, do not expect at this time to be in a position to launch a Junior ISA on 1 November.

Currently both CTFs and Child SIPP Dealing accounts are not charged an Annual Management Fee and whilst there is no government contribution to a Junior ISA, we hope to continue this approach to child accounts in the future.

Whilst the intention is for CTFs to migrate to become Junior ISAs, there are currently no timescales as yet for them to do so: HMRC will address this at a later date.

A summary of the Junior ISA (JISA) regulations:

• Available in both Cash JISA and Shares JISA, to eligible children under 18 who are not eligible to have a Child Trust Fund.
• From age 16, a child with a Junior ISA can also hold a Cash ISA (Shares ISAs are only available to persons aged 18 or over).
• Contribution limit £3,600 p.a. with annual review
• Subscription year run from 6 April to 5 April the following year (‘Tax Year’)
• No CGT or additional income tax (Income Tax will, where applicable, be deducted at source on dividends and cannot be reclaimed, but there's no further liability to income tax on investment income. Cash ISA interest is paid gross).
• Contributions, up to the annual limit, can be made by any person: once contributed the money belongs to the child.
• No withdrawals until age 18 (except in certain, particular, circumstances)
• Eligible investments as for a Stocks & Shares ISA
• At age 18, the JISA will automatically roll-over into an ISA of the same type (i.e. Cash ISA or Stocks & Shares ISA)

Please keep an eye on this page for updates.

• Choose the Self-select Shares account for active investment, or the Index Tracking (Stakeholder) account to follow the overall growth in the stock market as measured by the FTSE All-Share Index by investing in the Legal & General UK Index Trust.
• Contribute up to £3600 a year, plus the Government payments. (If you pay in more than £3600 in any one year we'll hold it in a 'feeder' account, ready to invest in the next 'year'.)
• Online access enables you to show your child how their Fund is growing, helping them understand money and encouraging them to take an interest in their financial future.
• 'Nominee account' structure enables us to carry out your instructions with minimum fuss and maximum efficiency - whilst your child remains the beneficial owner.
• Regular Investment Service - invest from £50 per month in our Self-select Shares CTF and pay just £1.50 per purchase, plus stamp duty and statutory charges with our Regular Investment Service.

Whilst only the account holder can normally pay-in to a Selftrade account, it’s different with a CTF. Anyone - family, friends, colleagues … can contribute to a CTF. To do so, you’ll need the child’s full name, Unique Reference Number (URN) and date of birth. All you then need do is call us with those details and your debit card details. We’ll then process the payment and credit the child’s account. Alternatively, send a cheque to Selftrade, made payable to Talos Securities Ltd re [child’s name] noting the child’s details on the reverse.

The registered contact can credit the account direct once logged in to the CTF account: if you have provided your bank details you can also arrange a transfer from that account. A regular contribution can also be made by direct debit – please complete and send to us a direct debit authority.

Remember, all payments into a CTF belong to the child and cannot be returned to you or to any other person.

'Best execution' - as standard.
We'll contact over 30 different 'Market Makers' in order to get you the best price available, aiming always to beat the bid and offer price quoted on the Stock Exchange's systems.

Limit and stop orders
For extra control over your dealing, place limit and stop orders on UK shares, valid for up to 90 days, at no extra charge. Plus we can advise you when your limits 'trigger' with an email or SMS alert.

In addition to your Government vouchers, you, your friends and family can pay in to the child's CTF account in the following ways:

Self-select Shares CTF

• Use a VISA Delta or Switch/Maestro card to pay in and trade straightaway.
• Direct debit, cheque or standing order (See our Help section for more details.)

Index-Tracking (Stakeholder) CTF

• VISA Delta or Switch/Maestro card, direct debit, cheque, standing order. Subject to an individual credit minimum amount of £10.

No fee for dividend collection
We'll collect your dividends, credit them to your account and provide you with an annual summary. You'll also earn interest monthly on the cash balance in your account.

Investing in your children's future is a worthwhile thing to do. But you need to look to your own future too!

Our SIPP Dealing account can help you to do just that.

Selftrade SIPP Dealing account >

Plus for shorter-term, but tax-efficient investing, check out our ISA service – use your annual £7,200 ISA allowance to good effect – no Capital Gains Tax liability and no additional income tax to pay on investment income.

Selftrade ISA >

Please remember: The value of investments may fall as well as rise and you may get back less than you originally invested. Limited liability instruments mean that you cannot lose more than you have invested. The risks associated with different instruments will vary: you should choose investments appropriate to your needs and consider your overall mix of different investment types.

View full risk warning >