Child Trust Funds: Statutory Instrument increasing the annual subscription limit for 2018 to 2019
Published 4 April 2018
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Who is likely to be affected
- Child Trust Fund (CTF) account holders with more than £4,128 saved per year
- banks, building societies and other financial institutions who offer CTFs
General description of the measure
The measure increases the amount that can be saved annually into an account from £4,128 to £4,260 from 6 April 2018. Interest and gains received on money saved in a CTF is tax-free.
Policy objective
The measure supports savings for children.
Background to the measure
At Autumn Budget 2017, the government announced that the annual subscription limit for Child Trust Funds would increase to £4,260 from 6 April 2018. Around 6 million children hold a CTF.
Detailed proposal
Operative date
The measure will have effect from 6 April 2018.
Current law
The account rules for CTF, including the amount that can be paid into an account are set out in the Child Trust Funds Regulations 2014 (SI 1450/2004) (CTF Regulations).
Proposed revisions
The CTF Regulations will be amended by the Child Trust Fund (Amendment) Regulations 2018 to increase the amount that can be paid into a CTF each year from £4,128 to £4,260.
Summary of impacts
Exchequer impact (£m)
| 2017 to 2018 | 2018 to 2019 | 2019 to 2020 | 2020 to 2021 | 2021 to 2022 | 2022 to 2023 |
|---|---|---|---|---|---|
| negligible | negligible | negligible | negligible | negligible | negligible |
The measure is expected to have a negligible impact on the Exchequer.
Economic impact
The measure is not expected to have any significant economic impacts.
Impact on individuals, households and families
Around 6 million children hold a CTF. The measure will increase the amount that can be saved into a CTF.
The measure is not expected to impact on family formation, stability or breakdown.
Equalities impacts
The measure impacts on around 6 million children who hold CTFs. It is not anticipated that the measure will impact any groups with protected characteristics.
Impact on business including civil society organisations
This measure is expected to have a negligible impact on the approximately 70 approved CTF providers. One-off costs include familiarisation with the new CTF subscription limit from 6 April 2018 and adjusting their accounting systems to take account of the new limit. It is not expected that there will be any on-going costs. There is no impact on civil society organisations
Operational impact (£m) (HMRC or other)
The overall additional costs for HMRC in implementing these changes are anticipated to be negligible.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
This measure will be kept under review through communication with affected taxpayer and provider groups
Further advice
If you have any questions about this change, please contact Helen Williams on Telephone: 03000 512336 or email: savings.audit@hmrc.gsi.gov.uk
Declaration
John Glen MP, Economic Secretary to the Treasury has read this tax information and impact note and is satisfied that, given the available evidence, it represents a reasonable view of the likely costs, benefits and impacts of the measure.