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Child Trust Funds Bill


Child Trust Funds Bill

1

 

A

Bill

To

Make provision about child trust funds and for connected purposes.

Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and

consent of the Lords Spiritual and Temporal, and Commons, in this present

Parliament assembled, and by the authority of the same, as follows:—

Introductory

1       

Child trust funds

(1)   

This Act makes provision about child trust funds and related matters.

(2)   

In this Act “child trust fund” means an account which—

(a)   

is held by a child who is or has been an eligible child (see section 2),

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(b)   

satisfies the requirements imposed by and by virtue of this Act (see

section 3), and

(c)   

has been opened in accordance with this Act (see sections 5 and 6).

(3)   

The matters dealt with by and under this Act are to be under the care and

management of the Inland Revenue.

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2       

Eligible children

(1)   

For the purposes of this Act a child is an “eligible child” if the child was born

after 31st August 2002 and either—

(a)   

a person is entitled to child benefit in respect of the child, or

(b)   

entitlement to child benefit in respect of the child is excluded by the

15

provisions specified in subsection (2)(a) or (b) (children in care of

authority),

   

but subject as follows.

(2)   

The provisions referred to in subsection (1)(b) are—

(a)   

paragraph 1(c) of Schedule 9 to the Social Security Contributions and

20

Benefits Act 1992 (c. 4) and regulations made under it, and

 
Bill 1 53/3
 
 

Child Trust Funds Bill

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(b)   

paragraph 1(1)(f) of Schedule 9 to the Social Security Contributions and

Benefits (Northern Ireland) Act 1992 (c. 7) and regulations made under

it.

(3)   

Where entitlement to child benefit in respect of a child is excluded by a directly

applicable Community provision, subsection (1) applies as if that exclusion did

5

not apply.

(4)   

Where a person is entitled to child benefit in respect of a child only because of

a directly applicable Community provision, subsection (1) applies as if the

person were not so entitled.

(5)   

A child who—

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(a)   

does not have the right of abode in the United Kingdom within the

meaning given by section 2 of the Immigration Act 1971 (c. 77),

(b)   

is not a qualified person, or a family member of a qualified person,

within the meaning of the Immigration (European Economic Area)

Regulations 2000 (S.I. 2000/2326), and

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(c)   

is not settled in the United Kingdom within the meaning given by

section 33(2A) of the Immigration Act 1971,

   

is not an eligible child.

(6)   

A person is not to be regarded for the purposes of subsection (1)(a) as entitled

to child benefit in respect of a child (otherwise than by virtue of subsection (3))

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unless it has been decided in accordance with—

(a)   

Chapter 2 of Part 1 of the Social Security Act 1998 (c. 14), or

(b)   

Chapter 2 of Part 2 of the Social Security (Northern Ireland) Order 1998

(S.I. 1998/1506 (N.I. 10)),

   

that the person is so entitled (and that decision has not been overturned).

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(7)   

Regulations may amend subsection (1) by substituting for the reference to 31st

August 2002 a reference to an earlier date.

3       

Requirements to be satisfied

(1)   

A child trust fund may be held only with a person (referred to in this Act as an

“account provider”) who has been approved by the Inland Revenue in

30

accordance with regulations.

(2)   

An account is not a child trust fund unless it is an account of one of the

descriptions prescribed by regulations.

(3)   

The provision which may be made by regulations under subsection (1)

includes making approval of an account provider dependent on the person

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undertaking to provide accounts of such of the descriptions for which

provision is made by regulations under subsection (2) as is prescribed by the

regulations.

(4)   

The terms of a child trust fund must—

(a)   

secure that it is held in the name of a child,

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(b)   

secure that the child is beneficially entitled to the investments under it,

(c)   

secure that all income and gains arising on investments under it

constitute investments under it,

(d)   

prevent withdrawals from it except as permitted by regulations, and

(e)   

provide that only a responsible person may give instructions to the

45

account provider with respect to its management.

 

 

Child Trust Funds Bill

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(5)   

Regulations may impose other requirements which must be satisfied in

relation to child trust funds.

(6)   

In this Act “responsible person”, in relation to a child, means a person who has

parental responsibility in relation to the child, other than—

(a)   

a local authority or, in Northern Ireland, an authority within the

5

meaning of Children (Northern Ireland) Order 1995 (S.I. 1995/755 (N.I.

2)), and

(b)   

a person under the age of 18 or, in Scotland, 16,

   

but, in Scotland, means the child if aged 16 or over.

(7)   

“Parental responsibility” means—

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(a)   

parental responsibility within the meaning of the Children Act 1989

(c. 41) or the Children (Northern Ireland) Order 1995, or

(b)   

parental responsibilities within the meaning of the Children (Scotland)

Act 1995 (c. 36).

4       

Inalienability

15

(1)   

Any assignment of, or agreement to assign, investments under a child trust

fund, and any charge on or agreement to charge any such investments, is void.

(2)   

On the bankruptcy of a child by whom a child trust fund is held, the

entitlement to investments under it does not pass to any trustee or other person

acting on behalf of the child’s creditors.

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(3)   

“Assignment” includes assignation; and “assign” is to be construed

accordingly.

(4)   

“Charge on or agreement to charge” includes right in security over or

agreement to create a right in security over.

(5)   

“Bankruptcy”, in relation to a child, includes the sequestration of the child’s

25

estate and the appointment on the child’s estate of a judicial factor under

section 41 of the Solicitors (Scotland) Act 1980 (c. 46).

5       

Opening by responsible person

(1)   

In the case of each child who is first an eligible child by virtue of section 2(1)(a)

the Inland Revenue must issue, in a manner prescribed by regulations, a

30

voucher in such form as is so prescribed.

(2)   

The voucher must be issued to the person who is entitled to child benefit in

respect of the child (or, in the case of a child who is such an eligible child

because of section 2(3), to a responsible person).

(3)   

A responsible person may, by giving the voucher to an account provider

35

within such period beginning with the day on which the voucher is issued as

is prescribed by regulations, apply to open for the child with the account

provider a child trust fund of any description provided by the account

provider.

(4)   

On receipt of the voucher the account provider must—

40

(a)   

open, in accordance with regulations, a child trust fund of that

description for the child and

(b)   

inform the Inland Revenue in accordance with regulations.

 

 

Child Trust Funds Bill

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6       

Opening by Inland Revenue

(1)   

In the case of each child to whom this section applies, the Inland Revenue must

apply to open for the child with an account provider selected by the Inland

Revenue a child trust fund of any description provided by the account

provider and selected by the Inland Revenue.

5

(2)   

The account provider must—

(a)   

open, in accordance with regulations, a child trust fund of that

description for the child and

(b)   

inform the Inland Revenue in accordance with regulations.

(3)   

This section applies—

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(a)   

to a child in respect of whom a voucher is issued under section 5(1) but

in whose case subsection (4) is satisfied, and

(b)   

to a child who is first an eligible child by virtue of section 2(1)(b).

(4)   

This subsection is satisfied in the case of a child if—

(a)   

the period prescribed under section 5(3) expires without a child trust

15

fund having been opened for the child, or

(b)   

it appears to the Inland Revenue that there is no-one who is a

responsible person in relation to the child.

(5)   

No liability is to arise in respect of the selection of an account provider, or a

description of child trust fund, by the Inland Revenue under this section.

20

7       

Transfers

Regulations may make provision about the circumstances in which—

(a)   

a child trust fund which is an account of one of the descriptions

prescribed by regulations may become an account of another of those

descriptions, and

25

(b)   

a child trust fund held with one account provider may be transferred to

another.

Contributions and subscriptions

8       

Initial contribution by Inland Revenue

(1)   

The Inland Revenue must pay to an account provider such amount as is prescribed by

30

regulations if the account provider has

(a)   

informed the Inland Revenue under section 5(4) or 6(2) that a child trust fund

has been opened, and

(b)   

made a claim to the Inland Revenue in accordance with regulations.

(2)   

On receipt of the payment the account provider must credit the child trust fund

35

with the amount of the payment.

9       

Supplementary contribution by Inland Revenue

(1)   

If this section applies to a child the Inland Revenue must inform the account

provider with whom a child trust fund is held by the child that this section

applies to the child.

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Child Trust Funds Bill

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(2)   

If the account provider makes a claim to the Inland Revenue in accordance with

regulations, the Inland Revenue must pay to the account provider such amount as is

prescribed by regulations.

(3)   

On receipt of the payment the account provider must credit the child trust fund

with the amount of the payment.

5

(4)   

This section applies to a child if—

(a)   

a child trust fund is held by the child,

(b)   

the child was first an eligible child by virtue of section 2(1)(a), and

(c)   

the condition in subsection (5) is satisfied in relation to the child.

(5)   

That condition is that it has been determined in accordance with the provision

10

made by and by virtue of sections 18 to 21 of the Tax Credits Act 2002 (c. 21)—

(a)   

that a person was, or persons were, entitled to child tax credit in respect

of the child for the child benefit commencement date, and

(b)   

that either the relevant income of the person or persons for the tax year

in which that date fell does not exceed the income threshold or the

15

person, or either of the persons, was entitled to a relevant social

security benefit for that date,

   

and that determination has not been overturned.

(6)   

In subsection (5)(b)—

   

“the income threshold” has the meaning given by section 7(1)(a) of the Tax

20

Credits Act 2002,

   

“the relevant income”, in relation to a person or persons and a tax year,

has the meaning given by section 7(3) of that Act in relation to a claim

by the person or persons for a tax credit for the tax year,

   

“relevant social security benefit” means any social security benefit

25

prescribed for the purposes of section 7(2) of that Act, and

   

“tax year” means a period beginning with 6th April in one year and

ending with 5th April in the next.

(7)   

If the child benefit commencement date fell before the appointed day, this

section applies in relation to the child even if the condition in subsection (5) is

30

not satisfied in relation to the child provided that the condition in subsection

(8) is so satisfied.

(8)   

That condition is that—

(a)   

income support, or income-based jobseeker’s allowance, was paid for

the child benefit commencement date to a person whose applicable

35

amount included an amount in respect of the child, or

(b)   

working families’ tax credit, or disabled person’s tax credit, was paid

for that date to a person whose appropriate maximum working

families’ tax credit, or appropriate maximum disabled person’s tax

credit, included a credit in respect of the child.

40

(9)   

If the child benefit commencement date fell before 6th April 2003, subsection

(5) has effect as if—

(a)   

the reference in paragraph (a) to the child benefit commencement date

were to any date in the tax year beginning with 6th April 2003,

(b)   

the reference in paragraph (b) to the tax year in which the child benefit

45

commencement date fell were to the tax year beginning with 6th April

2003, and

 

 

Child Trust Funds Bill

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(c)   

the reference in paragraph (b) to being entitled to a relevant social

security benefit for the child benefit commencement date were to being

so entitled for any date in that tax year for which the person was, or the

persons were, entitled to child tax credit in respect of the child.

(10)   

“Child benefit commencement date”, in relation to a child, means the first day

5

for which child benefit was paid in respect of the child (otherwise than because

of a directly applicable Community provision).

10      

Further contributions by Inland Revenue

(1)   

Regulations may make provision for the making by the Inland Revenue in the

circumstances mentioned in subsection (2) of payments to account providers of child

10

trust funds held by

(a)   

eligible children, or

(b)   

any description of eligible children,

   

of amounts prescribed by, or determined in accordance with, regulations.

(2)   

The circumstances referred to in subsection (1) are—

15

(a)   

the children attaining such age as may be prescribed by the regulations,

or

(b)   

such other circumstances as may be so prescribed.

(3)   

The regulations must include provision—

(a)   

for making account providers aware that such amounts are payable,

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(b)   

about the claiming of such payments by account providers, and

(c)   

about the crediting of child trust funds by account providers with the

amount of such payments.

11      

Recouping Inland Revenue contributions

(1)   

Regulations may make provision requiring that, in circumstances prescribed

25

by the regulations, a person of a description so prescribed is to account to the

Inland Revenue for amounts credited to a child trust fund in respect of Inland

Revenue contributions (together with any income and gains arising in

consequence of the crediting of those amounts).

(2)   

“Inland Revenue contributions” means payments made by the Inland Revenue

30

which were required to be made under or by virtue of sections 8 to 10 or which

the Inland Revenue considered were required to be so made.

12      

Subscription limits

(1)   

No subscription may be made to a child trust fund otherwise than by way of a

monetary payment.

35

(2)   

Regulations may prescribe the maximum amount that may be subscribed to a

child trust fund in each year (otherwise than by way of credits made under or

by virtue of this Act or income or gains arising on investments under the child

trust fund).

(3)   

“Year”, in relation to a child trust fund held by a child, means—

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(a)   

the period beginning with the day on which the child trust fund is

opened and ending immediately before the child’s next birthday, and

(b)   

each succeeding period of twelve months.

 

 

 
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