CTFs were abolished in early 2011 and the government introduced the Jisa soon after, in November the same year.
The consultation, which closes 6 August 2013, focuses on whether transfers from CTFs to Jisas should be allowed, while setting out the government’s proposals for how such transfers could take place, should it decide to proceed.
In its consultation documents, published in mid-May after being announced in this year’s Budget, the government said it was committed to supporting savings and ensuring families have access to suitable tax-advantaged savings products that allow them to save for their children’s futures in a clear and simple way.
More than 6m children currently hold a CTF, which invested in cash or stocks and shares accounts. The schemes were forecast to cost the government around £500m in 2012/13 and they were subsequently reduced and then discontinued. Eligibility for the accounts ended on 3 January 2011.
The government said “in the interest of fairness”, children with CTFs – therefore ineligible to open a Jisa – should not be prohibited from holding a Jisa if it would better suit their long-term interests than a CTF.
It proposed that voluntary transfers should be allowed; however, where the registered contact for the CTF does not want to transfer funds to a Jisa, it would be retained within the CTF.
The government’s alternative proposal is the idea of merging the CTF into the Jisa. It said, “Such an approach could be attractive due to the simplification and other benefits that may arise from there being just one tax-advantaged savings product available for all children.
“It is therefore now consulting on whether it should be possible to transfer funds from CTFs to Jisas and if so, on what basis transfers should be available.”