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5.11.2 Child Trust Funds and Junior Individual Savings Accounts for Children Looked After

See Junior ISA For Looked After Children Statutory Guidance for Local Authorities

Junior Individual Savings Accounts (ISA) and The Child Trust Fund Government websites and The Share Foundation website.

Within Children Services’ The Social Care Information Services Team (SCIT) is transferring most/all responsibilities for this work to the Brokerage Team. Some detail in this chapter, therefore, remains under review.

Please note: New Child Trust Funds ceased from January 2011.  The section of this chapter relating to Child Trust Funds applies to children born between 1 September 2002 and 2 January 2011.

Note also that from April 2015, money held in Child Trust Funds can be transferred into Junior ISAs.

AMENDMENT

In August 2016, this chapter was updated throughout.


Contents

  1. Child Trust Fund
  2. Junior Individual Savings Accounts (ISAs) for Looked After Children


1. Child Trust Fund

1.1 What is the Child Trust Fund (CTF)?

The Child Trust Fund is a savings and investment account designed to give children born on or after 1 September 2002 and on or before 2 January 2011 a financial start in life and to help teach them the value of saving.

All children born between those dates who are eligible (see Section 1.2, Who is Eligible?) are entitled to this account including children in care.

1.2 Who is Eligible?

Children born on or after 1 September 2002 and on or before 2 January 2011 are eligible for the Child Trust Fund if child benefit has been awarded for them for at least one day before 4 January 2011, they live in the UK and they are not subject to immigration restrictions.

There are special rules for looked after children (see Section 1.6, Child Trust Fund and Looked After Children).

1.3 How does the Child Trust Fund Work and How Much is it Worth?

For children born on or after 1 September 2002, and before 1 August 2010, a voucher worth £250 was sent to the child benefit claimant, with a further £250 for children of families on low incomes. For children born between 2 August and 2 January 2011, the voucher was for £50, with a further £100 for children of families on low incomes A person with Parental Responsibility for the child could then open a Child Trust Fund account for that child with an approved Child Trust Fund provider, e.g. bank, building society etc.

If after a year, no one had opened an account, the Inland Revenue opened an account for the child. Where there was no-one (i.e. not a local authority) with appropriate parental responsibility HMRC arranged for the Official Solicitor to act as registered contact for the child’s account.

Children whose 7th birthday fell between 1t September 2009 and 31 July 2010, received an extra payment on their birthday of £250 (plus an extra £250 for low-income families/in care)

1.4. Can Additional Payments be Made?

Anyone can contribute to a Child Trust Fund up to the sum of £4,080 per year.

1.5. Who can Access the Money in the Child Trust Fund?

Only the child can withdraw money from the fund when he or she reaches 18. No one else can touch it.

The money belongs solely to the child despite the fact that the person with Parental Responsibility manages the money until the child reaches 16. Young people aged 16 and over can take over the management but cannot make withdrawals until they are 18.

In the case of terminally ill children, the person with Parental Responsibility can request permission to withdraw funds.

1.6 Child Trust Fund and Looked After Children

There were special rules for looked after children as child benefit is not payable to them whilst they are looked after. If a child benefit award had been made for a child before he or she came into care, s/he was eligible for the fund account in the usual way.

Where a child came into care soon after birth, the Inland Revenue opened a Child Trust Fund account for the child.

Even when the local authority had Parental Responsibility under a Care Order, they were not entitled to open or manage a Child Trust Fund account. Where possible, the looked after child’s parents were encouraged and helped to take on this responsibility.

1.7 Roles and Responsibilities of Local Authority

See Child Trust Bulletin 2115 May 2013 with flowchart. The requirements for local authorities to send returns to HMRC were/are as follows:

Returns for periods up to 6 April 2011

Local authorities were required to make monthly returns, including nil returns, for all months up to and including the month ending 6 April 2011 of looked after children who were

  • Born after 31 August 2002 and before 3 January 2011; and
  • Who became looked after for the first time before 3 April 2011

Where local authorities subsequently discover, for whatever reason, that a child’s details were not included on the appropriate return they should complete a Form CTF15 (Child) and send it to the Child Trust Fund Office.

Returns from 7 April 2011 onwards

From 7 April 2011, local authorities must make a return each month Form CTF15 of any looked after children. There is an individual child’s form and a collation form.

  • Born after 31 August 2002 and before 3 January 2011, and under the age of 16 at the end of the return period who, in the period covered by the return, became looked after and have no one (apart from the local authority), or no one appropriate, with parental responsibility; or
  • Were already looked after, but their circumstances have changed so that there is now no one (apart from the local authority), or no one appropriate, with Parental Responsibility.

This is so that the Official Solicitor / Accountant of Court can manage these children’s Child Trust Fund accounts. For a child to be treated as having no one, or no one appropriate with parental responsibility, at least one of the six conditions set out at paragraph 5.5 of the Guidance for Local Authorities must apply.

Within Children Services, Brokerage will:

  • Complete the returns within 5 working day of the 11th of the month. Herts Unique Identifier Number is 12169 and the Local Authority Officer (contact) for the HCC is Patricia Gibbons by secure email;
  • Ensure that each individual child’s LCS record records that the child’s information has been forwarded to HMRC and record who is managing the account;
  • Receive all enquiries from the Official Solicitor about Child Trust Fund Accounts and forward to the appropriate social worker;
  • Support social workers’ enquiries as to whether a child and a CTF Account and how to contact HMRC for the information by the online form;
  • Receive all enquires about adding monies to this CTF account and enabling this to happen (up to £4,080 pa is permitted by anyone);
  • If the social worker or carer wants to add money to a CTF account to enable this to occur, and ensure that a receipt is obtained and placed on LCS record;
  • Enter any action undertaken by Brokerage is entered on the child’s LCS Personal Finance Casenote;
  • Submit a monthly return to (person) by secure email on or before the 17th of each month.

The social worker will ensure any action undertaken under taken with the account is evidenced with receipts on LCS and entered on the child’s LCS Personal Finance Casenote.

Please remember:

To include any child’s details that were not included on an earlier return for a period before or after 7 April 2011. If there are no children to be reported in any month, a nil return is no longer required.

No child born on or after 3 January 2011 need be included in any return to CTFO.

1.8 Parental Responsibility

The child’s parent is deemed eligible to manage the Child Trust Fund except in the following circumstances:

  • Where the child lives permanently away from the parent with no face to face contact (including children whose plan is for adoption);
  • Where there is a court order terminating their contact with the child;
  • Where the parent is deemed to have significant mental health problems;
  • Where the child is lost and abandoned and where there is no prospect for reunification.

NB In all cases where the decision is to exclude, legal advice must be sought. The child’s social work team will decide who should be the named individual to receive correspondence from HMRC about the CTF account. In Hertfordshire the mother is usually the named parent unless there is good reason for it not to be.

If parental responsibility is held by HCC, and the social work team decides that there is no suitable person with parental responsibility to manage the CTF, and then it is considered that there is no individual to do so, then this role is referred to the Official Solicitor by the HMRC. To enable this Brokerage will provide HMRC with

  • An address for the child so that the Official Solicitor can contact the child and in the early years his/her carer;
  • Any additional information e.g. religious beliefs that would affect the type of Child Trust Fund account that would be suitable and any views expressed by the child about the type of fund they would like.


2. Junior Individual Savings Accounts (ISAs) for Looked After Children

2.1 What are Junior ISAs?

In November 2011, the Government announced a new scheme to support long-term savings for children. The Junior ISA for Looked After children scheme replaces the support previously provided through Child Trust Funds (CTF). See Junior ISA For Looked After Children Statutory Guidance for Local Authorities and Junior ISA Account. And The Share Foundation and Guidance Leaflets for carers, parents and children and young people

Looked After children born between 1 September 2002 and 1 January 2011 have previously received support for their long-term savings through the Child Trust Fund (CTF). They will keep their CTFs until their 18th birthday, when they can access their savings. Junior ISAs were designed to replace CTFs following the end of the CTF scheme. No one can hold both a CTF and a Junior ISA.

Junior ISAs provide a tax-free way to save for under 18s. The money in a Junior ISA belongs to the child, but they can’t take the money out until they are 18. They can then decide what they want to do with it. Because savings are locked into the account until the account holder’s 18th birthday, Junior ISAs are for building long-term assets, rather than day-to-day savings.

There are 2 types of Junior ISA:

  • A cash Junior ISA, i.e. no tax is payable on interest on the cash saved;
  • A stocks and shares Junior ISA, i.e. the cash is invested and no tax is payable on any capital growth or dividends received.
A child can have one or both types of Junior ISA. Junior ISAs automatically turn into a regular ISA when the child turns 18.

2.2 Who is Eligible?

All children under the age of 18 who live in the UK and who are not eligible for a Child Trust Fund (i.e. were born before 1 September 2002 or after 1 January 2011) are eligible for a Junior ISA.

A Junior ISA will be opened for every child (if they do not already have one) who has been Looked After for any continuous period of 12 months or more, starting on or after 3 January 2011, and who is not eligible for a Child Trust Fund. The Government will provide an initial £200 payment to open the accounts. This includes children who are subject to a Care Order and who are accommodated under Section 20, whether in residential care, with a foster carer or at home.

2.3 Can Additional Payments be Made?

Anybody can put money into a Junior ISA. This can include carers, local authorities or young people themselves. The total limit for payments into Junior ISAs is £4,000 in each tax year. The Government is also hoping to be able to raise further contributions from people or organisations that want to support Looked After children. These contributions would be added to accounts.

If a third party wants to make a contribution to an account Children Services’ should assess whether it is in the child’s best interests to receive this or not and inform the account manager.

2.4 Opening and Managing Accounts

The Department for Education has contracted The Share Foundation, The Share Foundation, to administer the scheme until the end of March 2015. The Share Foundation will open and manage accounts using independent selection advice while children remain Looked After. They will also seek to raise additional funding from charitable sources for distribution to the accounts, and support the financial education of looked-after children at appropriate times so that they can understand how best to use the financial asset of their account.

Brokerage will identify which looked after children who are not entitled to CTF and have been looked after for at least one year, and therefore eligible for a Junior ISA, sending information by secure email:

  • Child level information in a single list on a monthly basis;
  • Provide The Share Foundation with a named contact (Patricia Gibbons, Brokerage Support Manager) for dealing with all aspects of the Junior ISA scheme;
  • Enter information given to, and received from the Share Foundation on the Child’s LCS record, including valuation information;
  • Respond to requests for information from The Share Foundation, to enable them to open the Junior ISAs and draw down the £200 payments;
  • Receive any monies from The Share Foundation and distribute to young adults as required;
  • Ensure that there are effective and proportionate security arrangements safeguarding the integrity and confidentiality of the data to be sent to and received from The Share Foundation, in full compliance with the Data Protection Act 1998, and use secure e-mail;
  • Once an account has been opened ensure that, as an integral part of the care planning review and where it is appropriate to do so, the carer, parent and child are made aware of the account;
  • Once a child stops being looked after, notify The Share Foundation and provide the necessary information to the person with parental responsibility for the child (and the child if 16 or 17 years old) so that they may take over the management of the account;
  • Pass to The Share Foundation any request for the account to be changed to meet specific criteria, such as a Sharia-compliant account, from social worker, parent, or child;
  • Provide a lead for initiatives from The Share Foundation.
The Independent Reviewing Officer will ensure that children who are eligible for a Junior ISA receive funding and, where appropriate, they and their carers and parents receive suitable advice about their accounts, both while they are looked after and when they cease to be looked after.

2.5 16 and 17 year olds

Once their account is opened, 16 and 17 year-olds will be able to make decisions about how best to look after their money for themselves, though they still won’t be able to access their savings until they are 18. Local authorities should, as they deem appropriate, use materials provided by The Share Foundation so that 16 and 17 year olds they are looking after, and care leavers, may assume investment control in this way. See Guidance Leaflets.

Children over the age of 16 are responsible for managing their own accounts, if they have capacity. See Mental Capacity Act 2005 Code of Practice.

2.6 When a Child Ceases to be Looked After

When a child stops being Looked After because they have reached the age of 18, the local authority should ensure they may access their matured accounts. See Guidance Leaflets

When a child stops being Looked After before the age of 16, the local authority should ensure the person with Parental Responsibility for the child is aware of the account and encourage them to take the necessary steps to assume control of the account. If the child leaves care aged 16 or 17, either they or their parent or carer could assume control of the account, if the child has not already done so. See Guidance Leaflets

2.7 The Role of The Share Foundation

The Share Foundation contacted all local authorities for initial information on eligible children such as the name, gender, date of birth and date they first became Looked After for 12 months or more in 2012. Hertfordshire provided information so that children who are, or have been, looked after can receive the payments to which they are entitled. Now further returns will be required at a frequency to be agreed between The Share Foundation and Hertfordshire. All contacts wishing to discuss specific information with The Share Foundation must be authorised in advance by being named as a contact person in these returns.

2.8 What Actions Must the Local Authority Take?

Unless there are exceptional reasons that justify a variation, local authorities must:

  • Provide The Share Foundation with a named contact for dealing with all aspects of the Junior ISA scheme;
  • Respond to requests for information from The Share Foundation, to enable them to open the Junior ISAs and draw down the £200 payments;
  • Ensure that there are effective and proportionate security arrangements safeguarding the integrity and confidentiality of the data to be sent to and received from The Share Foundation, in full compliance with the Data Protection Act 1998;
  • Once an account has been opened, ensure that (as an integral part of the care planning review, and where it is appropriate to do so), the carer, parent and child are made aware of the account;
  • Once a child stops being Looked After, notify The Share Foundation and provide the necessary information to the person with Parental Responsibility for the child (and the child if 16 or 17 years old) so that they may take over the management of the account.

In addition:

  • Independent Reviewing Officers should ensure local authorities carry out their duty as good corporate parents so that children who are eligible for a Junior ISA receive funding and, where appropriate, they and their carers and parents receive suitable advice about their accounts, both while they are Looked After and when they cease to be Looked After.

Click here to view the Share Foundation flowchart

The Share Foundation, through pfeg, The Personal Finance Education Group, provides materials to help local authorities support Looked After children in learning about finances:

e.g. For Carers, For children aged 11+, for children aged 15+ and so help them make the most of their account and the financial asset they will be able to access at the age of 18.

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