Treasury and Inland Revenue
Each child born on or after September 1st 2002 will receive an initial endowment from the government of £250, rising to £500 for the poorest children. Government will make a further payment when children are seven, and family and friends will be able to contribute up to £1200 a year to the fund. Access to the fund will be through the child benefit system. All income and capital growth will be tax free.
Community Care, Oct. 9th-15th 2003, p.38-39
Figures from the Inland Revenue suggest that 5.8m families are now benefiting from tax credits. Take up is better than expected, but about 700,000 families are still missing out. There is anxiety about the "reconciliation process" that will take place in 2004/05 under which families will have to return money they were overpaid and concern about the poverty trap effects of the means test through which families gain the credits.
P. Wintour and R. Jones
The Guardian, October 29th 2003, p.7
Parents will be free to choose from the available schemes for investing the tax-free cash endowment of up to £1,000, the government plans to give through the child trust fund scheme, Downing Street said yesterday. The much-discussed example of asset-based welfare will be available from April 2003 to all children born after Sept 1 last year. The Government regards the scheme as a way of engineering a savings culture and giving the poor a responsible stake in society. The basic £250 endowment will be supplemented by an additional £250 for children of families on child tax credit, provided the household income is below the level, currently £13,200, at which the CTC begins to taper off. Roughly one-third of Britain's children will receive this additional cash.
(See also The Financial Times, October 29th 2003, p.6; Daily Telegraph, October 29th 2003, p.11)