The government’s plans to scrap child trust funds are unlikely to become law until early August. But if you have a child after that date you are still eligible for a reduced payment until 31 December 2010, says Tax Tips & Advice. Most families will receive £50 instead of £250; less well-off families will receive £100 instead of £500.
To qualify you must have submitted a child benefit claim by 31 December 2010. “If you’re late with your claim, your child will lose out on the CTF payment altogether, irrespective of when they were born”. The taxman has said, however, that ‘common sense’ will be applied over children born in the final weeks of 2010, particularly given the Christmas postal delays.
But don’t lose too much sleep over the first £50. Remember that “once a CTF is open any income or gains generated on money invested in it is tax-free”. Since family members and friends can pay up to £1,200 into the CTF account, this could prove to be “a much better perk” than the initial handout.