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HMRC frustrated by CTF take-up
30/05/2007
After one in five parents failed to invest their Child Trust Fund (CTF) vouchers, HM Revenue and Customs (HMRC) has invested the money on parents' behalf.
Yet the downside is that the HMRC only makes this decision after 12 months, meaning that the funds are losing about £7.5 million of potential interest for children across Britain and Northern Ireland.
Although 2.2 million vouchers had been issued by the government as of December 2005, just 1.66 million were invested in time, meaning that a quarter of vouchers had exceeded the 12 month investment deadline.
The HMRC has now been forced to set up 500,000 accounts for children after parents did not invest the £250 voucher they received on behalf of their child.
Ecomonists say it is vital for parents to invest in their children early, yet Jennifer Holloway, spokesperson for Skipton Building Society, explains that it is understandable that some new parents do not.
"There's a number of factors, one of the things being that when you have a child, obviously, your world's turned upside down and finding the time the to invest…something that's been sent through the post isn't necessarily high on the list of priorities. People don't necessarily realise that they are meant to invest them," she said. "In terms of people fully understanding what they're meant to do at a time when it's fraught…it's not that surprising."
Parents who are confused about what CTFs entail should visit their solicitors for advice as soon as possible, in order not to lose out on tax-free interest.
Contact us for legal advice
Yet the downside is that the HMRC only makes this decision after 12 months, meaning that the funds are losing about £7.5 million of potential interest for children across Britain and Northern Ireland.
Although 2.2 million vouchers had been issued by the government as of December 2005, just 1.66 million were invested in time, meaning that a quarter of vouchers had exceeded the 12 month investment deadline.
The HMRC has now been forced to set up 500,000 accounts for children after parents did not invest the £250 voucher they received on behalf of their child.
Ecomonists say it is vital for parents to invest in their children early, yet Jennifer Holloway, spokesperson for Skipton Building Society, explains that it is understandable that some new parents do not.
"There's a number of factors, one of the things being that when you have a child, obviously, your world's turned upside down and finding the time the to invest…something that's been sent through the post isn't necessarily high on the list of priorities. People don't necessarily realise that they are meant to invest them," she said. "In terms of people fully understanding what they're meant to do at a time when it's fraught…it's not that surprising."
Parents who are confused about what CTFs entail should visit their solicitors for advice as soon as possible, in order not to lose out on tax-free interest.
Contact us for legal advice
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