Terminally-ill children should be able to access Child Trust Fund (CTF)accounts if draft amending regulations, issued by the Treasury, are approved.
Under current CTF regulations, money cannot be withdrawn from an account until the child holding the account is 18, unless the child has died or where providers take management charges.
Now the Government has decided “it would not be equitable to prevent access to CTF accounts where children are terminally ill” according to Inland Revenue commentaries.
Providers of CTF products will not be involved in the claim for early access procedures, except to direct claimants to the CTF office, which will administer their claim.
A child’s parents may make the claim or another guardian or adoptive parent with parental responsibility. However if the child is over 16 they or the person with parental responsibility can make the early access request.
It is proposed there will be no restrictions on the number of withdrawals once access has been granted providing the account is not completely withdrawn.
It must stay open to receive on-going Government contributions or savings by family and friends to be added to the account.
When access has been granted, funds can be transferred by the account managers to the child without the need to sell any investments, unless it is a life assurance product still in force.
This would cause a tax issue from the changing nature of income and gains from a tax free roll up under the CTF to taxable situation as regards the underlying funds the insurer has to back up the policy.IFAonline
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