£125m in Child Trust Fund tax breaks will go to waste

Parents will be wasting £125 million in tax breaks by not making full use of their children’s Child Trust Fund (CTF) allowance, according to figures from Unbiased.co.uk, the website promoting the benefits of independent financial advice.

Unbiased.co.uk research estimates that less than three quarters (71%) of eligible children have had a CTF account opened for them. And on top of that less than half of the CTF accounts opened since 2005 will make use of their full £1,200 funding allowance per year, equating to an overall tax waste of £125 million.

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.”