The Child Trust Funds (Amendment) Regulations 2025

Published: Tue 24th Jun 25

These regulations, effective July 15, 2025, amend the 2004 Child Trust Funds Regulations.

Specifically, they extend the period during which certain investments (units or shares in recognised UCITS, or those within umbrella schemes) are considered qualifying investments until December 31, 2026.

This prevents those investments from losing their qualified status and safeguards children's savings.

Arguments For

Supporting existing investments: The extension maintains the qualification of certain investments, protecting the interests of children whose funds hold these assets.
Administrative simplicity: The amendment avoids complex restructuring or divestment for fund managers and reduces administrative costs.
Market stability: The transitional period allows for orderly adjustments in the financial markets and avoids disruptions to child trust fund investments.
Legal basis: Amendments are justified under Section 3 of the Child Trust Funds Act 2004, granting the Treasury authority to make such changes.

Arguments Against

Potential for market distortion: The prolonged qualifying period might create an uneven playing field for other qualifying investments.
Fiscal implications: The extension represents a policy choice with implicit financial implications that could affect future budgets, though these are likely minimal.
Limited scope: The amendment narrowly targets specific investments and does not address broader concerns about the Child Trust Funds scheme.
Alternative approaches: A more comprehensive review of the Child Trust Funds scheme and a wider reform could have been considered, potentially impacting a greater number of children's savings

Citation and commencement These Regulations may be cited as the Child Trust Funds (Amendment) Regulations 2025 and come into force on 15th July 2025.

This section establishes the official name of the regulations as the Child Trust Funds (Amendment) Regulations 2025 and sets their effective date as July 15, 2025.

Amendment of the Child Trust Funds Regulations 2004 After paragraph (2C) of regulation 12 of the Child Trust Funds Regulations 20042 (qualifying investments for an account) insert—

(2D) Notwithstanding any provision of paragraph (1), investments which— (a) immediately before 1st October 2024 fell within paragraph (2)(i) by virtue of being units in, or shares of, a recognised UCITS3, or (b) qualify under paragraph (2)(i) by virtue of being part of an umbrella scheme that immediately before 1st October 2024 fell within that paragraph by virtue of being units in, or shares of, a recognised UCITS, are to be treated, until the end of 31st December 2026, as qualifying investments for an account.

(2E) Paragraph (2A) ceases to have effect at the end of 31st December 2026.

This section amends regulation 12 of the Child Trust Funds Regulations 2004.

It adds two new paragraphs (2D and 2E).

Paragraph (2D) specifies that certain investments in Undertakings for Collective Investment in Transferable Securities (UCITS) maintain their "qualifying investment" status until December 31, 2026.

Paragraph (2E) indicates that paragraph (2A) of the original regulation will cease to apply after December 31, 2026.

Explanatory Note (This note is not part of the Regulations) These Regulations amend the Child Trust Funds Regulations 2004 (“the principal Regulations”). Regulation 2 amends regulation 12 of the principal Regulations. It inserts a new paragraph (2D) in regulation 12 to provide that investments which immediately before 1st October 2024 were units in or shares of a recognised UCITS, or which were units in or shares of a recognised UCITS within an umbrella scheme immediately before 1st October 2024, are qualifying investments until 31st December 2026. New paragraph (2E) of regulation 12 provides that paragraph (2A) ceases to have effect at the end of 31st December 2026. A Tax Information and Impact Note will be published on the HM Government website at https://www.gov.uk/government/collections/tax-information-and-impact-notes-tiins.

This explanatory note summarizes the regulations' purpose.

It clarifies that the amendments affect regulation 12 of the 2004 Child Trust Funds Regulations, extending the qualifying investment period for specific UCITS investments.

A related tax document is referenced for further information.

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