The Child Trust Fund is a Government scheme set up for children born since 1 September 2002, which aims to provide them with a long term savings account which they can access at the age of 18.
There are two types of Child Trust Fund: a Stakeholder, and a non-Stakeholder.
A Stakeholder Child Trust Fund means that it needs to follow certain rules defined by the Government.
The HSBC Child Trust Fund is a Stakeholder and invests in the HSBC UK Growth & Income Fund - CTF Accumulation Share Class.
This Share Class has been specially set up for the HSBC Child Trust Fund to ensure that it meets the Stakeholder requirements.
How it works
The Government will make an initial payment via a voucher to all eligible child benefit claimants
This money and all future payments are placed into an account for the child which works in the following way:
- The Cash Account - all CTF payments are paid into this account.*
- The Investment Account - once payments have cleared in the Cash Account the cash is moved into the Investment Account to buy shares in the HSBC UK Growth & Income Fund - CTF Accumulation Share Class. This fund invests in stocks and shares which means the price of shares and any income from them can go down as well as up. It is possible that the value may fall below the original investment. This may also happen as a result of changes in the rate of exchange where overseas securities are held.
- The Overflow Account - any payments we receive over £1,200 in a birthday year will be placed in this account. When the child reaches their next birthday this money will be moved to the Cash Account. *
* Interest on the Cash Account and Overflow Account is currently paid at 1% below the Bank of England base rate. Interest is accrued daily and paid annually, normally the day before the Child's next birthday, into the appropriate account. If the Bank of England base rate is 1% or lower, interest will not be accrued.
The essentials
Available for all children born on or after 1 September 2002 who live in the UK and are not subject to immigration control. The person opening the account must be an eligible child benefit claimant.
- Up to £1,200 per birthday year can be added by lump sum or regular payments to the Child Trust Fund by family and friends
- The Child Trust Fund will belong to the child and all contributions will be a gift to them
- Money cannot normally be taken out of a Child Trust Fund until the child reaches the age of 18. However, at that time, the money will be free from income and capital gains tax
- An annual statement will be sent giving the value of the CTF and full details of all transactions carried out during the year
The value of the tax treatment described will depend on individual circumstances. Tax rules could change.
Fund prices can be found under www.assetmanagement.hsbc.com/uk by selecting Individual Investors then selecting Funds and Prices, OEIC Funds and scrolling down to "HSBC UK Growth & Income Fund – CTF Share Class"
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Our My Savings account as another way of saving for children.
