More than 750,000 young adults missing out on thousands – here’s how to check and claim

More than 750,000 young adults are missing out on an average of £2,242 which is easy to claim, the government has warned.

New findings from HMRC reveal that 758,000 people have yet to claim the savings in their child trust fund account, missing out on a massive cash boost.

These funds are long-term, tax-free savings set up for every child born between 1 September 2002 and 2 January 2011. The government deposited £250 in each, with those in low-income families or in local authority care receiving an additional £250.

Young people can take control of this account at 16 and withdraw funds when they turn 18. With interest, most grow to be worth much more than when they were set up.

A child’s parent or guardian can also pay up to £9,000 a year into the account. Many still do this, but new accounts can’t be set up. Child trust funds were introduced by Labour under Tony Blair in 2005, and scrapped by the Conservatives in 2011.

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Hope Kerr-Williams, a 22-year-old apprentice from Nottingham, claimed her child trust fund at 18. She said she found out about her account when she was a teenager, and by the time she claimed it, it was worth £5,000.

“I was counting down the days until I could claim my child trust fund as I was planning my move to Sheffield,” Ms Kerr-Williams said. “I used it to put a deposit down on my flat, pay the first month’s rent and buy essentials for my accommodation, which all adds up when you have to buy everything at once. I also bought a laptop for my course.

“Having my child trust fund account saved me from going into an overdraft or borrowing money when I had a lot of expenses at the start of university. It gave me independence and a great start to adult life, which I’m still grateful for.”

Child trust funds have now been replaced with junior individual savings accounts (ISAs) which are long-term, tax-free savings accounts for children. These accounts work similarly, except the government does not give any money when they are set up.

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For those who want check and claim a child trust fund, HMRC issued guidance for those who may have lost one. The most common reasons for this are that they or their guardians have lost track of it or forgot it was set up.

The department also advises against using third-party agents who offer to find child trust funds at a price. In extreme cases, they have been known to charge £350 or even 25 per cent of the value of the account for this.

Instead, the tax authority advises young people either search ‘find your child trust fund’ on Gov.uk or use the free, approved tool from The Share Foundation, which requires just a few details. It is then easy to claim and access the account.

Once the funds have been accessed, there are several options for what to do with them. Charlene Young, a pensions and savings expert at AJ Bell, said: “Once you’ve tracked down the money you can choose what to do with it. Your options are to transfer it to an adult ISA or withdraw the money.

“Until then, your money will just sit in an account that no one else has access to, possibly paying very high charges.

“Anything you transfer to an adult ISA at maturity will not count towards your annual ISA allowance, which is £20,000 for over-18s.”