TrustMar 14 2023

Hundreds of millions in child trust funds not claimed

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Hundreds of millions in child trust funds not claimed
Hundreds of millions of pounds placed in trust by the government for young adults has not been claimed. (Pexels/Cottonbro Studio)
BySally Hickey

An MP has called for HMRC to take child trust funds "off the backburner" and help re-unite young adults with money that is due to them.

Between 2005 and 2011 the government invested £2bn into child trust funds for children born during that period, with an average of £250 per child which they are able to access when they turn 18.

Those in low-income families or in local authority care received an additional £250.

"[The trusts] could be a vital lifeline to young peopleMeg Hillier, MP

According to a report from the National Audit Office, published today (March 14), more than a quarter of child trust funds have remained untouched for a year or more after their owners turned 18.

Meg Hillier MP, chair of the committee of public accounts, said: “HMRC's latest figures show almost £400mn had yet to be claimed, which in a cost-of-living crisis could be a vital lifeline to young people, particularly those from low-income backgrounds.

"HMRC needs to take child trust funds off the backburner and proactively help reunite young people with their funds.”

The total market value of the trusts was £10.5bn in April 2021, an average of £1,911 per trust.

Of the £800mn that belongs to young people aged 18 or over, £394mn had not been claimed by 145,000 people.

If the money is not claimed, it is retained by the trust provider as a 'matured child trust fund' and keeps its tax-free status until te account holder comes forward.

The NAO said it is unclear how many children and young adults are either unaware of, or cannot locate, their trust.

An HMRC spokesperson said: “We regularly remind people of child trust funds and how they can check if they have an unclaimed account.

"We are exploring further ways we can raise awareness of the scheme.”  

HMRC said the trust providers, including banks and building societies, could be earning up to £100mn annually from charges on the accounts.

There are currently 55 providers, down from 74 in 2011, so some accounts may have changed hands.

A YouGov survey in 2019 of parents of children aged 8 to 16 showed that one in six parents were unaware of the scheme, and 28 per cent of accounts were set up by HMRC after parents did not do so in the time frame required.

In 2019, HMRC began letting 15-year-olds know that they could have a trust account alongside the national insurance number notification it sends to children as they approach their 16th birthday. 

However, the data on the trusts between 2012 and 2020 is incomplete.