Hundreds of thousands of young adults aged between 18 and 21 are being urged to claim their child trust fund (CTF), with an average of £2,000 waiting for them.

HM Revenue and Customs (HMRC) is calling on 430,000 young people to claim their accounts as part of UK savings week.

There are currently over five million open CTF accounts, with more than 500,000 matured accounts being claimed or transferred into an ISA since the oldest child turned 18 in September 2020.

CTFs are long-term, tax-free savings accounts and were set up for every child born between 1 September 2022 and 2 January 2011, with the Government contributing an initial deposit of at least £250. Funds can be withdrawn once the account matures when the child turns 18.

Families can continue to pay up to £9,000 a year tax-free into a CTF until the account matures and the money stays in the account until the child withdraws or reinvests in another account.

A recent survey by UCAS asked first and second year university students about CTFs and the results showed that they were most interested to know how much money was in their account (43%) and how to claim it (32%).

The survey also revealed that 60% of student got their information about CTFs from their parents.

Second permanent secretary and deputy chief executive at HMRC, Angela McDonald, said: “Many 18 to 21-year-olds are starting out in first jobs or apprenticeships, starting university or moving into their first home and their CTF is a pot of money with their name on.

“I would encourage young people to use the online tool to track it down or, for parents of teenagers, to speak to them to ensure they’re aware of their CTF. It could make a real difference to their future plans.”

Senior personal finance analyst at interactive investor, Myron Jobson, added: “In many cases, CTFs have been forgotten along the way as junior ISAs took centre stage.

“But the value of CTF could be eroded the longer they are left untouched because of charges levied on the account. The National Audit Office estimates that CTF providers could be earning collectively up to £100m per year through charges on accounts – so it pays to act quickly.

“If you know the provider where the CTF is held, the first port of call should be contact them directly. If you don’t, you can ask HMRC. They can tell you where the account was originally opened.

“For the youngest holders, there are still six years before their CTF reaches maturity. If you hold a CTF for your child, it is worth considering transferring to a junior ISA. It is a no brainer in most instances as junior ISAs tend to have better rates on cash savings, more investment options and lower charges.”

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