£242m CTF tax breaks to be wasted 2008

Parents will waste £242m in tax breaks by not making full use of their Child Trust Fund (CTF) allowance this year, according to Unbiased.co.uk.

This figure has almost doubled since 2007, when £125m in tax breaks were unused, says the website.

The research also found, three quarters of eligible children have had a CTF opened for them. However, only a quarter of those opened since 2005 have recorded additional deposits.

If however half of the remaining accounts received the maximum funding, the amount of additional tax saving would equate to an overall tax waste saving of £242m, says Unbiased.

David Elms, chief executive of Unbiased.co.uk says, despite the government introducing CTFs as a way of helping parents plan for their children’s futures, parents are not making the most of this opportunity.

“Parents don’t have to pay tax on the interest earned on a CTF account and by not using their full funding allowance each year they may potentially be gifting the taxman more money than necessary.

“Since we launched TaxAction, we have seen a steady increase in the amount of tax we throw away. This year’s report shows we waste £9.3 billion, the highest since the campaign began.

"People who want to reduce the amount they waste should visit an independent financial adviser who can show you how to become tax savvy with your finances.”

CTF vouchers can be claimed within the first twelve months of a child’s life and can be invested in cash and equities with a range of different risk profiles.

Tax saving tips and guide, plus a tax wastage calculator can be founds at: www.unbiased.co.uk/takeaction