View Cambridgeshire LSCB Manual View Cambridgeshire LSCB Manual
View Working Together to Safeguard Children View Working Together to Safeguard Children

4.1.6 Looked After Children who have Their Own Funds


In October 2018, this procedure was updated to reflect local practice.


  1. Introduction
  2. Bank Accounts
  3. Junior Individual Savings Accounts (ISAs) for Looked After Children
  4. Child Trust Funds
  5. Criminal Injuries Compensation Authority Payments
  6. Trusts
  7. Income Tax

1. Introduction

Looked After children may have funds of their own. Occasionally, for example as a result of an inheritance, these funds may be sizeable.

Administration of such funds will largely depend upon their size. Specialist legal and financial advice must be sought as necessary.

Children and young people should be supported to develop their 'financial capability'. This is the ability to manage one's finances and to become a confident, questioning and informed consumer of financial services. It is a lifelong process and concerns the ability to make ends meet, keep track of finances, plan ahead, choose financial products and services and stay informed about changes and developments in financial matters, see 'Financial Capability and Looked After Children: The role of Corporate Parents'. A wide range of information on supporting young people to develop their financial capability, including information specifically for looked after children can be found on the Young Enterprise and Young Money website.

2. Bank Accounts

These are usually opened and held in the name of an adult as trustee for the child/young person.

Can be easy access, fixed term or for regular monthly saving. Assuming that the child is not liable to pay income tax (see Section 7, Income Tax), then the account holder will need to register to get interest tax-free by submitting form R85. For children under the age of 16, the account holder will complete and sign the form on the child's behalf; from 16 years, the young person should complete a fresh R85 and sign it themselves.

However, this may not be suitable for large sums of money as there is an annual limit to the amount of interest that may be earned by a child as a result of money paid in to the child's bank account by a parent/parent's civil partner. Beyond that limit the interest is liable to income tax at the rate applicable to the parent/civil partner. See HMRC website.

3. Junior Individual Savings Accounts (ISAs) for Looked After Children

See also Junior Individual Saving Accounts for Looked After Children - Statutory Guidance for Local Authorities.

3.1 Introduction

There is scheme to support long-term savings for Looked After children. Those who did not previously benefit from a Child Trust Fund (CTF), and have been Looked After for 12 months or more, receive a £200 Government payment into a Junior Individual Savings Account (Junior ISA).

These accounts are only suitable for amounts up to the current annual limit.

3.2 Junior ISAs

Junior ISAs provide a tax-free way to save for under 18s. The money in a Junior ISA belongs to the child, but they cannot withdraw the money until they are 18. They can then decide what they want to do with it. Because savings are locked into the account until the account holder's 18th birthday, Junior ISAs are for building long-term assets, rather than day-to-day savings.

3.3 Paying money in

Anybody can put money into a Junior ISA. The total limit for payments into Junior ISAs in the 2018-19 tax year is £4,260. For eligible Looked After children, the Government will open the account, making a one-off initial payment of £200 (or pay this into an existing account already held by a Looked After Child). Additional payments could then be made by carers, local authorities or young people themselves.

Children over the age of 16 are responsible for managing their own accounts. Once their account is opened they will be able to make decisions about how best to look after their money for themselves, though are still unable to access their savings until they are 18.

3.4 Eligibility

All children in the UK who have been Looked After continuously for 12 months or more and who were not eligible for a Child Trust Fund (i.e. were born before 1 September 2002 or after 1 January 2011) are eligible for the scheme.

Looked After children born between 1 September 2002 and 1 January 2011 have previously received support for their long-term savings through the Child Trust Fund (CTF). They will keep their CTFs until their 18th birthday, when they can access their savings. Junior ISAs were designed to replace CTFs following the end of the CTF scheme. No one can hold both a CTF and a Junior ISA.

3.5 Administration

In Cambridgeshire, the scheme is administered by the Business Support, Fostering Service, who provides monthly information about those children who have been looked after for twelve months to the Share Foundation.

The Department for Education has contracted The Share Foundation to administer the scheme and they open and manage accounts using independent selection advice while children remain Looked After. They will also seek to raise additional funding from charitable sources for distribution to the accounts, and support the financial education of Looked After children at appropriate times so that they can understand how best to use the financial asset of their account.

Once the ISA has been opened, the share foundation informs the Business Support, Fostering Service who will notify the social worker and the Independent Reviewing Officer.

When the child ceases to be looked after, the Business Support will ensure the Share Foundation is notified and provide the social worker and IRO with information to enable them to advise the child (if over 16) or those with parental responsibility, on the future arrangements for the account.

4. Child Trust Funds

Child Trust Funds are long-term tax-free savings accounts for children.

Any child born in the UK between 1 September 2002 and 2 January 2011 was entitled to a Child Trust Fund. The Government contributed a £250 voucher for each child. The parents or other persons in a position of responsibility for the child were responsible for opening the CTF. Also, children who turned seven between 1st September 2009 and 31st July 2010 or who qualified for Disability Living Allowance between 6th April 2009 and 5th April 2011 were eligible for extra payments from the government into their Fund.

More information on Child Trust Funds in general can be found on the GOV.UK website.

Some older looked after children and young people will have Child Trust Funds. Since October 2017 The Share Foundation, a registered charity, has been the organisation authorised by the government to manage the Child Trust Funds for all looked after children. The Share Foundation also raises funds which it will contribute to the Child Trust Funds that it manages.

For further information, see the DfE's information leaflet.

5. Criminal Injuries Compensation Authority Payments

See also Criminal Injuries Compensation Authority, GOV.UK website.

The Criminal Injuries Compensation Scheme is a government-funded scheme to compensate victims of violent crime, administered by the Criminal Injuries Compensation Authority (CICA) see Criminal Injuries Compensation Procedure.

The CICA may consider requests to make payment into a Child Trust Fund/Junior ISA or another type of account where the full value of the payment is protected until the child is 18 years old.

6. Trusts

Larger sums of money (exceeding the annual limits for bank accounts/Junior ISAs) will need to be held in trust for the child/young person until they reach legal majority (age 18) or a later specified age.

Specialise legal advice should be sought on the drawing up of the trust deed and subsequent administration of the trust. The social worker should obtain line management agreement for an initial discussion with LGSS Law who may advise on sources of specialist advice. Planning must consider the age at which the young person child can access the funds, and who should be the trustees, etc.

7. Income Tax

Children are liable for income tax in the same way as adults. However, income tax is not payable unless the young person's total taxable income per annum exceeds the tax-free Personal Allowance.

For more information see the HMRC website.