About Children trust funds (CTF)

In April 2005 this new long term savings and investments account for children  was installed to encourage early saving habits. It only applies to children resident in the UK and born after the 1st of September 2002. CTF are interest free of tax accounts where the government deposits a starting payment for the child’s birth and another on his/her seventh birthday. Parents can add up to ₤1,200 yearly, but the sum cannot be rolled over to the next year.
The government contributes with around ₤250 depending on your personal financial circumstances. For families with an income lower than ₤13,910, ₤500 will be granted. Parents with children born between the 1st of September and the 5th of April 2005 will be sent a voucher for a slightly higher amount. This accounts for the months when the initiative was not yet installed.
The vouchers can be deposited only in a CTF under the child’s name. They can be put in investment funds as holding shares, or bonds, or in basic deposit accounts. Stakeholder accounts are also available; they invest your child’s money in shares from several companies. Although providers will charge, the government has set a cap of 1.15% and in the long run good returns are expected through diversified investments in the stock market.
No access to the money is allowed until the child is 18. The income and gains from the CTF will not benefit the household’s financial situation during the time the account is open. As a financial education incentive, the person with parental responsibility has managerial authority until the child is 16, but afterwards the child must manage his/her own account. 
Be aware that if you are capable of putting away yearly the maximum amounts, your child will have enough money to finance University. For further information visit Inland Revenue’s website at www.inlandrevenue.gov.uk/ctf/ .