Parents are advised to verify if a Child Trust Fund exists for their child before opening a Junior ISA, to avoid losing valuable tax benefits and unintended account closures, as many accounts remain forgotten from the early 2000s scheme.
Parents are being urged to check whether a Child Trust Fund already exists before opening a Junior ISA for their child, after warnings that an overlooked account could lead to an avoidable loss of tax advantages. The issue affects children born between September 1, 2002 and January 2, 2011, when the government-backed savings scheme was running. According to HMRC guidance, the two accounts cannot be held at the same time.
Many families set up Child Trust Funds themselves, but millions were opened automatically when voucher schemes went unused. That has left some accounts forgotten for years. Government guidance says parents and guardians can ask HMRC to trace the provider if they do not know where the account is held, using the child’s name, date of birth and address details.
Alice Haine, head of personal finance at Hargreaves Lansdown, said the modern Junior ISA is effectively the successor to the Child Trust Fund, but the two cannot coexist. If a Junior ISA is opened when a Child Trust Fund is already in place, the newer account has to be closed. She warned that this could force investors to sell holdings or move cash out of the tax-free wrapper, undermining years of saving.
HMRC says that in these cases the Junior ISA must be closed and the money moved into a non-ISA savings account in the child’s name. The tax authority also says that, in most cases, no tax would be due on interest earned inside the Junior ISA. Government rules for the 2026-27 tax year allow up to £9,000 a year to be paid into a Junior ISA, while Child Trust Funds also remain open for contributions up to the same annual limit until the child turns 18. Once a Child Trust Fund matures, the child takes control of the account and can either withdraw the money or move it into an adult ISA.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
