One of the first government schemes to be hit by George Osborne’s raft of spending cuts is Child Trust Funds (CTFs); a Labour initiative whereby parents are given a £250 voucher to kick start a savings fund for their child.
In a bid to save money, Osborne was quick to wield the axe on the scheme which is set to save the taxpayer £520 million from 20011 onwards.
So when might parents start experiencing a difference?
Well, from the 1st of August this year, payments to newborns will be gradually decreased from £250 to £50 and from £500 to £100 for families on low incomes.
Originally, CTFs were given a top-up when children reach 7-years-old. This initiative is set to be scrapped although parents and relatives are still able to top-up trust funds when they see fit.
CTFs will also remain a tax-free haven and can still be converted into an ISA once the account holder is 18-years-old.
Those most likely to be affected are undoubtedly low income families who might have once benefited from the scheme but chose to have children after the January 2011 cut-off point.
Parents are being urged to continue saving for their child and not to be put off by the Government’s decision to end the scheme.
