Transferring Child Trust Funds into ISAs

It will be possible to transfer maturing Child Trust Funds (CTFs) into an Individual Savings Account (ISA) tax free and without affecting the overall ISA subscription limit. New rules will come into force from April 2020.

CTF accounts will start to mature in September 2020 when the first children reach 18.

At the age of 18 a CTF account holder is free to use their funds as they wish; they can spend it or re-invest it.

There are over 6 million CTF accounts in existence since they were launched in 2002, and around 800,000 are set to mature each year. They were abolished in 2011 and replaced by Junior ISAs.

Whilst CTFs can be transferred into new ISA accounts without breaking the annual £20,000 subscription limit, they will count towards the Lifetime ISA payment limit.

For the transfer to be effective, it has to be a single instruction to the fund provider to transfer the whole amount into an ISA. Once the funds are transferred, the account will be closed. It won’t be possible to keep some funds in the CTF post transfer.

Once a CTF reaches maturity, no additional amounts can be added, so the funds need to be transferred to another account to continue saving. If no instructions are given to the fund provider, the CTF money will be kept in a tax-free protected account until claimed.

The ‘protected account’ can be a ‘matured child trust fund account’ or a cash ISA or stocks and shares ISA, as offered by the original child trust fund provider.

HM Revenue & Customs includes information about CTFs when informing 16-year olds of their national insurance number.

More information about CTFs can be found on the .gov website. Further details about ISA can be accessed via our factsheet.