Extra boost for child trust fund?

By ANDREW OXLADE, COLUMNIST
Updated: 03:20 EST, 17 March 2005

CHANCELLOR Gordon Brown is planning another vote-winning appeal to families by topping up the new child trust funds with a third Government contribution.

The scheme was set up for children born after September 2002. Their parents get a £250 voucher to be invested on their behalf, with £500 available for children of the poorest third of households.

In December's pre-Budget report, Brown said the Treasury was looking at investing another £250/£500 at age seven — and Mr Brown yesterday suggested there could be a similar payment again during secondary school years.

A Treasury spokeswoman said the amounts were yet to be decided and that the whole process was out to consultation.

However, any such move is likely to further infuriate the parents of children who have been excluded.

Babies born before 1 September 2002 do not qualify. Banks and building societies have called for the tax breaks on CTFs be extended to all under-18s if not the payments as it will encourage a broader savings culture among young people.

CTFs avoid any income tax or capital gains tax liability, in the same way as Isas. This means parents can save up to an additional £1,200 a year.

Lisa and Kevin Bushell, of Caterham-on-the-Hill in Surrey, have twins, Harry and Phillipa, aged nearly three years old. They missed out by six months.

'It seems very unfair that they won't get anything at all,' said Lisa, 32. 'The Chancellor could have used the opportunity in the Budget to do something for all the children who are excluded, not more for those who are included.'

• See our full round-up of what you should do with your CTF cheque