Millions of teenagers in the UK are set to receive money from Child Trust Funds (CTFs) that has been waiting for them since they were young children, the Treasury has announced.

Since 2002, around 6.3 million CTF accounts have been set up, roughly 4.5 million by parents or guardians and another 1.8 million by HMRC where parents or guardians did not open an account.

CTFs were originally set up for children born between 1 September 2002 and 2 January 2011 and parents and guardians received a voucher to deposit in a CTF account on behalf of the child. From 1 September 2020, the oldest children will turn 18 and be able to access their money.

Economic Secretary to the Treasury, John Glen, said: “We want to make sure all young people can access the money which has been set aside for them, to invest in their future and continue a savings habit, as they turn 18.

“If you’re unsure if you have an account or where it may be, it’s easy to track down your provider online.”

The accounts are not held by HMRC but by a number of CTF providers who are financial services firms. The Government also highlighted that anyone can pay into the account, with an annual limit of £9,000 and no tax to pay on the CTF savings interest or profit.

Hargreaves Lansdown personal finance analyst, Sarah Coles, commented: “Teenagers get to crack open the first CTF nest eggs in September. They were designed to give every child a lump sum, offering them a head start in adult life. Of course, how much of a head start they get depends on how much is in their CTF, and what they do with it.
 
“Don’t wait until their 18th birthday to find out what they have. If your child qualified for a CTF, now is the time to track it down and make the most of it.
 
“It’s well worth considering a switch to a Junior ISA, and thinking carefully about whether a cash JISA or a stocks and shares JISA best suits their needs. It’s also important to consider regular payments into a JISA.

“Even putting £25 a month into a JISA that grows at 5% a year between birth and 18 will build a nest egg of £7,630. Once the CTF or JISA matures, it all belongs to the 18-year-old, who can spend it or invest it to suit their needs.”

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