The Deregulation Bill received Royal Ascent late last week, meaning legislation has been laid to allow Child Trust Funds to be transferred to Junior Isas from 6 April.
A technical bulletin from the Tax Incentivised Savings Association confirmed the change, explaining that the effect of final amendments will make provision for the transfer of a CTF to a Junior Isa with the same or another provider.
The amendment has also made an adjustment so that the registered contact only passes to a child of 16 or over if that child so elects and it would require ‘lifestyling’ of CTF stakeholder accounts from age 15 rather than 13.
According to Hargreaves Lansdown, the change should give 6.3m children significantly better choice, with in many cases lower charges and higher interest rates as well.
As FTAdviser covered in an adviser guide at the end of last year, people have been unable to transfer CTFs to Junior Isas and there are no plans to allow transfers the other way.
According to the Tisa, at the end of 2013 there were more than 6.1m child trust fund accounts with £4.8bn invested, as opposed to 300,000 Junior Isas with £500m invested.
Several providers urged parents to check the status of their CTF, with Scottish Friendly research showing that over half were unaware of changing legislation that will allow them to move their money into a Junior Isa.
It found that amongst just over 2,000 people surveyed in February this year, the current average CTF holds approximately £1,409, meaning that as much as £8.9bn could be moved.