Guidance

Guidance: transfer of a Child Trust Fund to a Junior ISA

Published 9 July 2015

Transfer of a Child Trust Fund (CTF) to a Junior Individual Savings Account (ISA)

25A.1.1

Subject to the CTF and Junior ISA terms and conditions, a CTF may be transferred to a Junior ISA in a variety of ways:

• investments held by the CTF provider, or his nominee, may be transferred in specie
• in cash
• in a combination of investments and cash

Transfers may be made between CTF providers and Junior ISA managers, or investments in a CTF may be transferred from a CTF to a Junior ISA (cash or stocks and shares) with the same institution.

A CTF may be transferred even if - at the time that the transfer is made - the child would not be eligible for a Junior ISA, for example because they are no longer resident in the UK, or a dependant of a crown servant.

25A.1.2

The transfer should be carried out as soon as requested by the CTF registered contact (which may be the child if they are aged over 16), subject to:

• any reasonable business period required to carry out the transfer (not exceeding 30 days)
• expiry of any cancellation or withdrawal period offered by the Junior ISA manager (see paragraph 11.33 of the guidance notes for ISA managers)

25A.1.3

A CTF must be transferred in full and the CTF closed once the investments/cash have been passed to the Junior ISA manager.

Part transfers of CTF investments cannot be made.

A child cannot have a CTF and a Junior ISA so if a CTF is transferred the whole account must be transferred and the CTF provider must close the account. The CTF can be transferred to either a cash Junior ISA or a stocks and shares Junior ISA.

25A.1.4

Where the CTF has a nil balance (for example where the investments held have fallen in value and charges have reduced the account balance), the transfer process must still be followed. This will allow the CTF provider to formally close their records.

Internal transfer

25A.2

25A.2.1

A CTF registered contact can transfer a CTF by requesting a transfer to a Junior ISA offered by the same manager.

25A.2.2

To carry out an internal transfer the CTF registered contact must give the appropriate transfer instructions required by the provider. There is no requirement under the CTF or Junior ISA rules for the transfer instructions to be in writing - this is a matter for the terms and conditions applying to the Junior ISA.

External transfer

25A.3

25A.3.1

A Junior ISA manager is not required to accept the transfer in of a CTF

In addition, credit unions cannot accept a transfer of a CTF where the child does not fulfil the membership requirement.

25A.3.2

To effect a transfer the CTF registered contact must complete a transfer authority with the Junior ISA manager. An example of a written external transfer authority is at paragraph 25A.9, and a telephone external transfer authority at paragraph 25A.10.

It is recommend that managers include a line in the transfer authority to advise that if, for any reason, the transfer from the CTF is not successful, any Junior ISA that has been opened on a provisional basis to accept the transfer will be void, and any subscriptions to the provisional Junior ISA will be returned per paragraph 26.5.5 of the guidance notes for ISA managers). The CTF will remain intact. See the sample form at paragraph 25A.9.

25A.3.3

If the registered contact is unable to provide the child’s Unique Reference Number (URN), alternative information may be provided to identify the account. The CTF provider should provide the URN to the Junior ISA provider, who should include it on their annual return of information (paragraph 25A 7.1) in each subsequent year.

25A.3.4

After completion of the form, and after expiry of any cancellation or withdrawal period (see paragraph 11.33 of the guidance notes for ISA managers), the Junior ISA manager must contact the CTF provider and request the transfer of the CTF. The Junior ISA manager must not request the transfer until after expiration of any cancellation or withdrawal period applying to the application for transfer. The Junior ISA manager must give the name of the person who requested the transfer, as well as details of the account, to the CTF provider.

The CTF provider must check that the person requesting the transfer is the registered contact for the CTF. If not, the transfer cannot continue. The CTF provider should tell the Junior ISA manager that the applicant is not the CTF registered contact, but should not disclose their details.

If the registered contact for the CTF, or the Junior ISA applicant, changes, the transfer form can be resent to the CTF provider. Where there is no registered contact for the CTF, the person requesting the transfer must take up the role of registered contact with the CTF provider before the transfer can go ahead.

If the Junior ISA provider has opened an account on a provisional basis pending the CTF transfer, they can allow a period of 60 days from provisional account opening for the registered contact to be changed and the transfer to go ahead, otherwise the provisional Junior ISA must be closed and any subscriptions removed (see paragraph 24.3 of the guidance notes for ISA managers).

If the transfer request is made by telephone a signature is not needed unless the CTF provider’s terms and conditions state they will not transfer the CTF unless they have received a written request with a signature.

25A.3.5

The transfer will be treated as a previous year’s subscription and, subject to the terms and conditions of the 2 accounts, the transfer may be made in a variety of ways:

• investments held by the CTF provider, or his nominee, may be transferred in-specie
• in cash
• in a combination of investments and cash

25A.3.6

The CTF provider must transfer investments and/or cash direct to the Junior ISA manager, and must keep a record of the transfer notice for 3 years after the date of transfer. The original CTF application form should not be sent to the new provider, but must be retained by the CTF provider. There are no circumstances in which an original CTF application form should be transferred to the new Junior ISA manager.

25A.3.7

The transfer should be carried out by the CTF provider as soon as requested by the Junior ISA manager, subject to any reasonable business period required to carry out the transfer (not exceeding 30 calendar days). The transfer should not be delayed awaiting reregistration of investments, or receipt of dividends or other income from investments. Any sums received after transfer should be forwarded to the Junior ISA manager together with details of the CTF in respect of which the sums have been received.

External transfer history forms

25A.4

25A.4.1

CTF providers should produce their own external transfer history forms. The form should be sent to the Junior ISA manager within 30 days of the date of the transfer. A model for an external transfer form is at section 25A.11. All external transfer forms must contain the same details as the model including the declaration. The form should be completed by the CTF provider as follows.

25A.4.2 Full name of child

Providers should enter the child’s full name (see paragraph 20.3.1 of the guidance notes for ISA managers), as held on their records.

25A.4.3 Date of birth

This should be reported in the format DDMMCCYY. For example: The date of birth of a child born on 3 June 2008 should be reported as 03062008.

25A.4.4 URN of the child

25A.4.5 Date of transfer

This should normally be the date of which the Junior ISA manager agrees to accept the transfer (see Appendix B of the guidance notes for ISA managers). It should be reported in the format DDMMCCYY.

25A.4.6 Follow on dividends

Enter details of the amount (if known) of any dividends which are payable on account investments but which have not been received by the date of transfer which will be forwarded to the Junior ISA manager. The Junior ISA manager should accept all payments forwarded to them.

25A.4.7

The Junior ISA manager may accept any information or declaration offered in a transfer application at face value, but should not open an account if they believe that any of the information given by the applicant is untrue.

Cancellation of a transfer

25A.5

25A.5.1

Internal and external transfers cannot be carried out until after the expiry of any withdrawal period offered by the Junior ISA manager (see paragraph 11.33 of the guidance notes for ISA managers), so where a registered contact exercises the right to withdraw the transfer request within such a period the CTF remains as it was before the transfer request.

25A.5.2

Seeking to exercise withdrawal rights after the expiry of any withdrawal period has no effect, and cannot prevent the transfer of the CTF that is underway.

Subscriptions following a CTF to Junior ISA transfer

25A.6

25A.6.1

Before the Junior ISA manager can accept any subscriptions, the registered contact must complete a suitably modified Junior ISA application (to reflect that in CTF transfer cases the child will hold a CTF). The declaration should include a statement: ‘If the child holds a CTF, it must be transferred as part of this application’ - see paragraph 20.14 of the guidance notes for ISA managers.

Managers can produce their own combined version of the transfer authority (25A.9) and Junior ISA application.

25A.6.2

The annual subscription limit for a CTF is based on the child’s birth year while Junior ISA subscriptions are based on tax years. Where a CTF is transferred to a Junior ISA, the CTF provider does not need to pass any subscription details to the Junior ISA manager. Once the transfer has been made, the child can access the full Junior ISA subscription limit for the tax year of transfer regardless of any subscriptions made to the CTF in that year.

For example, the child’s birthday is 1 October so his CTF subscription year runs from 1 October to the following 30 September. The subscription limits for both a CTF and a Junior ISA are £4,080. The CTF is transferred to a Junior ISA on 1 December 2015. Subscriptions of up to £4,080 could be made to the CTF between 1 October 2015 and 30 November 2015. Once the account has been transferred to a Junior ISA, subscriptions of up to £4,080 can be made between 1 December 2015 and 5 April 2016. The Junior ISA manager only has to report subscriptions he has received (after 1 December 2015).

Reporting following a CTF to Junior ISA transfer

25A.7

25A.7.1

Junior ISAs opened following a CTF transfer should be reported in the normal way - see chapter 28.

The child’s CTF URN should be reported in the National Insurance number field (see paragraph 28.1.1 of the guidance notes for ISA managers). In most cases, the URN will become the child’s National Insurance number, but where the child / adult subsequently provides a different National Insurance number, that should be reported on future returns.

Junior ISA providers are not required to report a date of first subscription (paragraph 25.4.9 of the guidance notes for ISA managers) for CTF transfer cases.

25A.8

25A.8.1 Subsequent Junior ISA transfers

In any subsequent transfers from the Junior ISA, the child’s URN (or National Insurance number) must be passed to the new Junior ISA manager who will take responsibility for reporting it each year.

Once the former CTF is transferred to a Junior ISA, the Junior ISA can then be transferred to another Junior ISA in the normal way. Transfers may be made between account providers, or investments in a Junior ISA may be transferred (in whole or in part) from one type of Junior ISA (cash or stocks and shares) to another.

Example of written transfer authority

25A.9

This transfer authority must be completed by the registered contact for the CTF account.

The following stakeholder CTF features might not be included in a Junior ISA:

• lifestyling from age 15
• minimum subscriptions of £10 allowed
• annual charge cap of 1.5%

If you are applying to transfer a stakeholder CTF, tick this box [   ] to confirm that you understand this and wish to proceed.

If the transfer from the CTF is not successful, any Junior ISA that has been opened on a provisional basis to accept the transfer will be invalid, and any subscriptions to the provisional Junior ISA will be returned. The CTF will remain intact.

Registered contacts title (if any) ……………………………………….……
Full name ………………
Registered contacts address …………………….…………………………… ……………………………………..… ……………………………………..…
Postcode ……………………………………..…

I apply to transfer a CTF for Child’s title (if any) ……………………………………….……
Full name …………………………………….……
Child’s address ………………………………….……
…………………………………….
Postcode………………
Child’s date of birth ………………………
Child’s Unique CTF reference number ………….………………….
(if known) (format QQ123456C) CTF provider …………………
I declare that I am the registered contact for the CTF

I authorise [Junior ISA manager’s name] to:

• hold the child’s subscriptions, investments, interest, dividends and any other rights or proceeds in respect of those investments and cash
• to make on behalf of the child any claims to relief from tax in respect of Junior ISA investments.

Signed ………………………………………………………
Date …………………………………………….

Telephone transfer authority

25A.10

The following stakeholder CTF features might not be included in a Junior ISA

• lifestyling from age 15
• minimum subscriptions of £10 allowed
• annual charge cap of 1.5%

If you are applying to transfer a stakeholder CTF do you wish to proceed?

If the transfer from the CTF is not successful, any Junior ISA that has been opened on a provisional basis to accept the transfer will be invalid, and any subscriptions to the provisional Junior ISA will be returned. The CTF will remain intact.

What is your name? (forename, middle initials, and surname)

What is your address? (including postcode)

What is the child’s name? (forename, middle initials, and surname)

What is the child’s address? (including postcode)

What is the child’s date of birth? (day/month/year)

What is the child’s Unique CTF reference number (format QQ123456C)?

Details of your CTF provider?

Do you declare that:

You are aged 16 years or older? You have parental responsibility for the child/are the child? You are the registered contact for the CTF?

By applying to open a Junior ISA you authorise us to carry out certain functions on your and the child’s behalf, and to make a written copy of your application. Details of this will be sent to you, with the terms and conditions of this Junior ISA.

I will now read back the application and declaration to you - if you agree that they are correct I can transfer the CTF from your current provider (after any withdrawal period).

CTF Transfer history form

25A.11

Name of Junior ISA manager ………………………………………………………..…………

Personal details of the child

Child’s title (if any), and full name …………………………………………….……
Date of birth: …………………………………………………………………….……
Unique CTF Reference Number (format QQ123456C): …………………………………………………………………….……

Date of transfer: …………….…………………………………………………
Details of any investment income to follow £………………………
Details of investments transferred

I declare that I:

• have fulfilled all my obligations to the child, the Board of HM Revenue and Customs or otherwise, which are imposed by the CTF regulations
• have transferred to you or your nominee any CTF investments, including cash, which are being transferred by virtue of the transfer of this CTF and, if appropriate, I have taken the necessary steps to ensure that the CTF investments can be registered in your name or the name of your nominee
• will forward any further payment received in respect of these CTF investments, including cash, to you on receipt

Date:………………………

Bulk transfers

25A.12

25A.12.1

Every transfer from CTF to Junior ISA must be made following an application by the registered contact for the CTF therefore there cannot be a bulk transfer of CTFs to Junior ISAs.