How to access your child or grandchild’s forgotten government trust fund – and 3 ways they can spend it

mum and teenage daughter sitting at a laptop

Back in 2002, the then-chancellor, Gordon Brown introduced a brand-new scheme aimed at helping parents to save for their children.

The child trust fund was designed to provide a nest egg for children when they reached the age of 18 – and the government even made a £250 contribution to every account. Parents and other relatives could then make further contributions to the fund, which would mature on the child’s 18th birthday.

Now, the Times reports that millions of teenagers are sitting on windfalls of £2,000 or more, but either can’t access it or don’t even know it is there.

Read on to find out why your child or grandchild could have a nest egg waiting for them, and for some ideas on how they could judiciously use the funds.

More than 6 million children could have a nest egg waiting for them

An initiative of the Labour government, more than 6 million children born between 2002 and 2011 were beneficiaries of a scheme to provide them with a nest egg when they reached 18.

However, many people have either lost track of their fund or don’t even know it exists. The National Audit Office (NAO) says that the value of the child trust funds has risen dramatically to an average of £1,911.

The NAO also says that many of the beneficiaries, who are now aged over 18, are unaware that they have access to the money or know how to get hold of it. More than a quarter of child trust funds have remained untouched for a year or more after their owners turned 18.

The first funds began to mature in late 2020 and the NAO reports that, of the £800 million that is now owing to the first cohort, £394 million was owing to 145,000 people.

If you have a child or grandchild who was born between September 2002 and January 2011, it’s likely that they have a fund in place that will mature on their 18th birthday.

Help the child to trace their fund

Finding a windfall of up to £2,000 or more could provide a useful financial boost for young adults, especially during a cost of living crisis.

The good news is that, if the money is not claimed, it is retained by the provider as a “matured child trust fund” and keeps its tax-free status until the account holder comes forward.

The first step is for the child to approach the provider of the trust fund if you or they know who the account is with.

If you do not know the provider – perhaps because the original provider no longer exists or has been bought by a competitor – the child can contact HMRC. You can do this online if you’re the parent or guardian of a child under 18, or the child can do this themselves if they are 16 or over.

3 useful ways to use the proceeds of a child trust fund

If your child or grandchild has a child trust fund waiting for them on their 18th birthday, there are several beneficial ways they could use the windfall.

  1. Pay for higher education fees

If the child is planning to head off to university, their child trust fund could help them navigate some of the living costs.

According to Save the Student, the average UK student spends £924 a month while studying, mainly on rent, groceries, and bills. The proceeds of their fund could help them meet some of these outgoings when they arrive at their chosen university.

  1. Start saving for the deposit for a home

2023 figures published by This is Money report that the average deposit a first-time buyer in the UK puts down to buy a home has reached an eye-watering £62,470.

While it’s unlikely the child trust fund will have grown to this amount, the child could consider investing the proceeds of their fund in a Lifetime ISA and start saving towards their deposit.

Lifetime ISAs are designed for people aged 18 to 39 looking to buy their first home, with a contribution limit of £4,000 in the 2023/24 tax year. Savers benefit from a government bonus of 25%, so their initial investment will be boosted by a quarter, as will further savings they make.

Over a few years this could grow into a tidy sum that could help your child or grandchild to get on to the property ladder.

  1. Give their pension a kick-start

One positive way to use an unexpected windfall is to give the child’s pension a kick-start.

If they invested £2,000 at age 18 into a pension, tax relief would see this amount boosted to £2,500. If they then left this money untouched until the retirement age of 57, assuming an average growth rate of 4% a year and no charges, this would be worth more than £11,500 when they came to retire.

Get in touch

If you want to start saving for your child or grandchild, or if they need advice on how to invest their child trust fund, please get in touch.

Contact us by email at or call us on 01189 876655.

Please note

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.