Baby Bonds - An Introduction
In April 2005, the government introduced 'baby bonds', or Child Trust Fund (CTF) Accounts to give them their official name. This article will try to explain what they involve and who can benefit.
What is a Baby Bond?
A Baby Bond is the popular name for a new kind of savings account that became available from April 2005 onwards.
Child Trust Fund (CTF) accounts, to give them their official name, are a government initiative to increase the amount of savings held for every child in the country. They are a tax free account, in which up to £1,200 a year can be invested, which will mature when the child reaches 18.
So what's new?
The major new point to baby bonds is that the government will issue a voucher for at least £250 to start off the account, and another voucher for double that when the child reaches 7 years.
Who qualifies for the vouchers?
The vouchers will be issued to every baby born since September 2002, and will be worth at least £250.
If the parents or guardians of the child are claiming tax credits, the value will be increased up to a maximum of £500.
It was also recently announced that the vouchers will include backdated interest, for those children born between the qualifying birthdate of September 2002 and the scheme's introduction in 2005.
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