Over £400m in tax-free savings left unclaimed

Almost £275m of government-allocated funds are being “hidden” from disadvantaged young people and going unclaimed, charities have warned.

- ATHENA STAVROU

Child Trust Funds (CTFs) are long-term, tax-free savings accounts for people born between 1 September 2002 and 2 January 2011, which they can access when they turn 18.

Children received around £250 each from the government in their CTFs, or £500 if they were from low-income families or in local authority care.

A second top-up was added at seven years old for those who qualified for disability living allowance between 6 April 2009 and 5 April 2011, or turned seven between 1 September 2009 and 31 July 2010.

The accounts could also be added to by a parent, with the average amount held in CTFs totalling around £2,000. If no action was taken by families to claim the accounts when they were set up, they were allocated by HMRC.

However, according to the Share Foundation, a charity that helps track down unclaimed funds, more than £400m is sitting unclaimed in HMRC-allocated accounts waiting for people to claim them. And more than half of the accounts belong to young adults on low incomes, with £274m meant for disadvantaged young people left unclaimed.

The charity has warned that if no action is taken, there will be nearly £1bn lying dormant and unclaimed for low-income young adults by the end of this parliament.

Dawn Smith, 21, said her Child Trust Fund helped her achieve the best grade possible at university, where she was later offered her first job.