Maturing Child Trust Funds will retain tax-free status

Matthew Barrand Investment, Trusts

From April 2020, maturing Child Trust Fund (CTF) accounts will retain tax-free status.

Although the rules apply from 6 April 2020, the first Child Trust Fund (CTF) accounts won’t mature until September 2020.

In summary, the CTF provider will be able, upon instruction from the account holder, to transfer the investments at maturity to a tax-advantaged ‘matured account.’ The ‘matured account’ can be a continuing CTF account, or a Cash ISA or Stocks and Shares ISA offered by the original CTF provider. If the CTF provider receives no instructions, the CTF investments must be placed, at maturity, in a ‘protected account’ pending instructions. Again, the ‘protected account’ can be a ‘matured account’ or a Cash ISA or Stocks and Shares ISA offered by the original CTF provider.

The cash moved from the CTF to the ISA won’t count towards the saver’s annual ISA subscription limit for that year.