Parents urged to make full use of Child Trust Fund allowance

Parents will be wasting £242 million in tax breaks by not making full use of their children's Child Trust Fund (CTF) allowance this year, according to figures from Unbiased.co.uk.

This figure is almost twice the amount that parents were wasting in 2007 (£125 million) by not using up this tax free saving option.

Unbiased.co.uk research estimates that three quarters (75%) of eligible children have had a CTF account opened for them. However, only a quarter (24%) of the CTF accounts opened since 2005 have recorded additional deposits, if however half of the remaining accounts received their maximum funding the amount of additional tax saving would equate to an overall tax waste saving of £242 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, we have seen a steady increase in the amount of tax we throw away. This year's report shows we waste £9.3 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."

CTF vouchers can be claimed within the first twelve months of a child's life and can be invested in cash or equities with a range of different risk profiles. An IFA can help you decide which product is right for you. Find one at unbiased.co.uk or by calling 0800 085 3250.

As a first step to stamping out this waste, visit Unbiased.co.uk's dedicated website at unbiased.co.uk/taketaxaction. The site contains tips on how to save tax, an online tax wastage calculator, and a guide to saving tax. You can also find details of local IFAs on the site or by calling 0800 085 3250.