The Child Trust Fund (Amendment) - HM Revenue & Customs

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Detailed proposal Operative date The changes which provide for the increase in the subscription level will apply with effect from 6 April 2013. The changes which remove the requirement for CTF managers to make certain returns to HMRC will apply with effect from 16 March 2013. Current law CTF subscription limits CTF annual limits are prescribed in regulations 9(2)(b) and 9(3) of the Child Trust Fund Regulations (SI 1450/2004) (CTF Regulations). Fortnightly returns to HMRC Regulation 30 of the CTF Regulations requires managers to make fortnightly returns to HMRC containing information relating to the opening, transfer and closing of CTF accounts. Proposed revisions CTF subscription limits Legislation will be introduced by Statutory Instrument to amend the annual subscription limits for 2013/14. With effect from 6 April 2013, the annual CTF subscription limit will be raised to £3,720. Fortnightly returns to HMRC It is proposed to remove Regulation 30 of the CTF Regulations so that the final fortnightly return will be for the period 1 st to 15 th March (and will be filed in the period 16 th to 20 th March 2013). Summary of impacts Exchequer impact (£m) Economic impact 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 Negligible Negligible Negligible Negligible Negligible Negligible This measure is expected to have a negligible impact on the Exchequer. The measure is not expected to have any significant economic impacts.
Impact on individuals and households Equalities impacts Over 6.3 million children have a CTF. The increased subscription limit will allow more money to be invested in these accounts. It will benefit those account holders whose CTFs receive the maximum amount that can be subscribed each year. How many account holders will be affected will depend on the detail of subscriptions to individual CTFs. No detailed estimates of the number of individuals likely to be affected are available. It is not anticipated that the changes will have a disproportionate effect on individuals with protected characteristics. Impact on business including civil society organisations Operational impact (£m) (HMRC or other) Other impacts This measure is expected to have a negligible impact on businesses and civil society organisations. Around 70 financial institutions currently offer CTFs, each will receive a negligible benefit in reduced annual administrative burdens, as they will no longer be required to provide fortnightly returns to HMRC. The change will result in a negligible one-off implementation cost for some businesses, if they decide to dismantle systems supporting the current fortnightly returns. HMRC will no longer receive and process fortnightly returns from CTF managers. This will contribute to the reduction in HMRC costs that will arise from the closedown of the CTF system. Competition: No competition issues have been raised in response to the proposals but they should place CTF providers on a more equal footing with providers of Junior ISAs who, in the absence of Government contributions, do not have to provide such returns. Small Firm Impact Test: All CTF managers, regardless of size, should benefit from these changes, which remove information requirements upon CTF managers. Monitoring and evaluation All aspects of CTF are subject to ongoing review through compliance work, as well as discussions with account providers and other interested groups. Further advice If you have any questions about this change, please contact Simon Turner on: 0300 054 6588 (email: simon.turner@hmrc.gsi.gov.uk). Declaration The Economic Secretary to the Treasury has read this Tax Information and Impact Note and is satisfied that, given the available evidence, it represents a reasonable view of the likely costs, benefits and impacts of the measure.
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The Child Trust Fund (Amendment) - HM Revenue & Customs

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