Should a Child Trust Fund be transferred to a Junior ISA?

Although child trust funds are available to millions of children born between September 2022 and January 2011, your child may benefit more from a Junior ISA

If young savers put their money in a child trust fund (CTF) instead of a Junior ISA (JISA), they may be losing out on lower fees and higher returns.

Children who were between September 1, 2002, and January 2, 2011, could open CTFs, a tax-free savings account. The government provided these accounts with a £250 initial deposit as a funding kickstart. By allowing the accounts to earn savings interest or make stock market investments before the children could access the money at the age of 18, the goal was to instill a saving habit in them at a young age.

In November 2011, Junior ISAs took the place of CTFs, placing the onus of setting up children's savings on parents. Additionally, as providers turned their attention to Junior ISA, CTFS accounts became zombie.

However, millions of savers continue to own CTFs. About three million accounts have matured since the scheme's oldest children turned eighteen in September 2020.

Watch the entire video here. As of April 2025, about 2,285,000 of these CTFs had been claimed or automatically transferred to an ISA, while 758,000 had not.

Experts caution that individuals who still have money in both ongoing and matured CTFs might be better off with a Junior ISA, which offers a greater selection of investment funds and better interest rates for those who kept their money in interest accounts. Even investment account fees may be less expensive.

What distinguishes a Junior ISA from a Child Trust Fund?

The goal of both CTFs and a Junior ISA is to encourage individuals to begin saving with tax-free cash and versions of stocks and shares.

Although banks, building societies, and asset managers used to offer CTFs, you can no longer open one. There is currently £1.6 billion in unclaimed CTFs, so if you are a parent of a child who qualified for a CTF but did nothing with the money, the government will have placed it in a default account for you, which you will need to find.

In a similar vein, banks offer Junior ISAs, and investment platforms like Hargreaves Lansdown and AJ Bell allow you to open a stock and share version.

Both offer the same tax benefits, including no UK income or capital gains tax due on any returns, and the annual contribution cap of £9,000 is the same.

When it comes to managing accounts, there are variations. While the majority of Junior ISAs can be opened and maintained online, some CTFs may only allow you to make changes and obtain information over the phone or through the mail.

Because CTFs are no longer offered, providers will be investing more in Junior ISAs, which will increase the number of fund options available for investment.

Until the child reaches the age of 18, the funds in both accounts are locked away, at which point they acquire legal ownership of those assets.

Another reason to think about moving your money is that, unlike junior ISAs, which mature into adult ISAs, CTFs don't change and the money may just sit there until something is done.

Regarding returns and fees, there are additional distinctions.

Is it appropriate to transfer a CTFS to a Junior ISA?

According to Alice Haine, Hargreaves Lansdown's head of personal finance, JISAs are more advantageous than CTFs.

"A child may only possess one CTF, and a transfer to a different provider may be necessary when switching between cash and investments.

"A child can hold a cash Junior ISA and a stock and share one at the same time with a JISA, and they can choose to divide the savings limit between the two. Therefore, there may be advantages to switching."

Because banks and building societies have little incentive to offer respectable rates and because the rate tends to decline after maturity, money left in a cash CTF may be receiving a lower return than JISAs.

A CTF's lower returns could indicate that you are actually losing money due to high inflation.

How do Junior ISA and CTF returns compare?

When selecting a cash Junior ISA, there is a greater selection of products available, and returns may be marginally higher.

Savers in Yorkshire Building Society's now-closed CTF, for instance, receive a rate of 3.65 percent, which decreases to 2.35 percent when it matures.

An average 2,200 CTF pot would yield 80 interest over the course of a year, or 51.70 if it had already reached maturity.

Leek Building Society, on the other hand, has a top cash JISA rate of 3.85%.

In a year, the average 2,200 CTF pot would earn about 30 more under a matured interest rate, or slightly more at 84.70 in a cash Junior ISA.

If you are investing, there is a greater difference. Charges may have a greater impact on your CTF returns than on stocks and shares in your Junior ISA.

Although there are no fees associated with cash CTFs, HMRC opened millions of investment accounts for parents as default stakeholder options, usually supporting tracker funds, with annual fees capped at 1.5%.

Junior ISAs often have lower fees and more investment options than the UK trackers that CTFs offered.

According to Antonia Medlicott, founder of Investing Insiders, a 1.5 percent fee is pricey for what is normally a basic UK tracker fund. "Stakeholder CTF returns tracked closer to the much more modest bond and mixed-investment sector averages over a 15-year period, while the average fund in the Investment Association's global sector grew by about 240 percent.

"That's twenty years of compounding working against these kids instead of on their behalf."

Before underlying fund fees, the cost of a contemporary Junior ISA can range from 0.15 to 0.35 percent, depending on the investment platform.

This is the difference between a fund that has barely kept up with inflation and one that has truly performed its function; it is not a marginal savings."

How to convert a CTF to a Junior ISA.

You must fill out a transfer form with the new provider after determining which Junior ISA is the best place to move the money.

Only the registered contacttypically the parent or the child after they turn 18can complete the transfer.

Details like your child's Unique Reference Number, which can be found on your yearly CTF statement, as well as information about the account type and provider, will be required. You can use HMRC's CTF finder at gov . uk if you have misplaced the information.

Two to six weeks may pass during a transfer, and some platforms may even offer cashback for transferring funds. You can't convert a CTF into a Junior ISA with every provider.

The CTF must be fully transferred and closed since you are unable to hold both. This means that parents should evaluate costs, investment options, performance, and any useful features before relocating.