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Parents wasting £63 million in Child Trust Fund tax breaks this year

• £63 million is wasted by parents not taking advantage of the full tax breaks of their children’s Child Trust Fund in 2009*
• A massive 99% of CTF accounts opened have not received maximum funding
• Only three quarters of eligible children have had a Child Trust Fund opened for them**

Research* released today from Unbiased.co.uk, the professional advice website, shows that parents are wasting £63 million in tax breaks by not making full use of their children’s Child Trust Fund (CTF) allowance this year.

Unbiased.co.uk research reveals that only a quarter (24%) of the CTF accounts opened since 2005 have recorded additional deposits, and only a meager 1% received maximum funding. Even if just half of the accounts which had no additional funding had been topped up to the maximum amount, the additional tax saving would equate to an overall amount of £63 million.

Additionally the research discovered that only three quarters (72%) of eligible children have had a CTF account opened for them.  Since the introduction of Child Trust Funds approximately 4.3 million vouchers have been issued to eligible children, however, in the same period only 3.1 million accounts have been opened. 

A CTF is a long term savings and investment account where the child can only withdraw money when they turn 18, although the child can start making decisions about how the money is managed when they turn 16.  Parents should ensure they invest the £250 voucher as soon as possible to ensure they receive the maximum tax saving gains on the account.  A maximum of £1200 each year can be saved in the account by parents, family or friends. 

Karen Barrett, Chief Executive of Unbiased.co.uk comments, “The government introduced Child Trust Funds as a way of helping parents plan for their children’s futures. However, our research has shown that parents are not making the most of this opportunity. Parents don’t have to pay tax on the interest earned on a CTF account and by not using their full funding allowance each year they may potentially be gifting the taxman more money than necessary.”

“The new year is a great time to review both your own and your children’s finances.  Parents should take action now and can carry out a free and confidential search at Unbiased.co.uk to find an independent financial adviser who can offer invaluable advice on the best way to safeguard their children’s future.”

ENDS

*TaxAction 2008 report produced for IFA Promotion by RAKM, based on a specially commissioned analysis of Inland Revenue and a range of other official data sources

** 4.3 million vouchers have been issued / 3.1 million accounts have been opened * 100 = 72%

For further information on Unbiased.co.uk, the professional advice website pleases contact:

Sign up to Unbiased.co.uk’s unique Professional Connections service, allowing IFAs, mortgage brokers and solicitors to find and link up with other professional advisers across the UK to expand their current business network.

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Notes to Editors

Unbiased.co.uk, the professional advice website

Unbiased.co.uk is the free and confidential UK-wide search service matching consumers with the most appropriate local professional advisers for their needs.  In 2008, Unbiased.co.uk fulfilled over half a million searches for local, professional advice. 

The portal currently houses three professional advice searches: ‘find an IFA’, ‘find a mortgage adviser’, and ‘find a solicitor’, and is inviting accountants to sign up for its ‘find an accountant’ service.  These searches enable consumers to find relevant professional advisers by postcode, area of specialism and payment method, amongst other options. 

IFA Promotion, the organisation behind Unbiased.co.uk, is now in its 20th year, and was set up to promote the benefits of independent financial advice to the consumer. 

Unbiased.co.uk’s product provider sponsors

Registered Office: Unbiased.co.uk is the consumer brand of IFA Promotion Ltd, 90 St. Vincent Street, Glasgow G2 5UB. Registered in Scotland: No. 114606