MSE News

Families with disabled children set to be allowed to withdraw £2,500 from Child Trust Funds and Juniors ISAs without the need for court approval

Mother and son kneading dough in the kitchen

Families with disabled children will be able to withdraw up to £2,500 from Child Trust Funds (CTFs) or Junior ISAs (JISAs) without first needing court permission, in a move by the Government to try to reduce the financial burden for parents and guardians with vulnerable kids.  

Tens of thousands of children who are disabled have been left unable to access funds because of overcomplicated rules that have made it disproportionately costly and time consuming for parents and guardians to gain access to savings, particularly smaller amounts.

Under current rules, a family member or guardian with children, who do not have the mental capacity to manage their own money, must apply to the court to gain access to funds. This can incur costs of hundreds of pounds and take many months to finalise.

In response to these concerns, the Government has launched an eight-week consultation on a new system that seeks to ease the administrative burden. A new streamlined process would allow withdrawals and payments from cash-based accounts of up to £2,500.

Writing in a column for The Sunday Times, Ed Davey, leader of the Liberal Democrats, said: "This is a huge relief for thousands of parents like me who can now look forward to our children having some money of their own - without the dread of a court process and the stress and frustration that comes with it."

If the consultation passes, the financial services sector will have to continue to safeguard vulnerable customers

Under the relaxing of rules, financial providers will, however, be required to maintain important safeguards. This will include requiring medical evidence to certify the account holder lacks mental capacity to manage their own financial affairs and verification that funds will be used in the best interests of the account holder.

To be able to make a withdrawal, guardians of the account holder will have to undergo the following security measures:

  • The collection of medical evidence to certify that the account holder lacks mental capacity to manage their own financial affairs.
  • A declaration of spending to confirm that funds will be used in the best interest of the account holder.
  • That money is being paid directly to the provider of goods and services as opposed to the applicant.
  • Checks on whether any other person may already be authorised to receive the funds by virtue of acting under a Power of Attorney.

The maximum withdrawal without using a court will be £2,500

Mr Davey, however, said the proposed cap is too small and should be doubled. Anything over £2,500 will still have to be accessed via the courts.  

He said: "The Government’s proposed cap of £2,500 is very low, and will still block many disabled young people from accessing hundreds or even thousands of pounds of their own money. I think that limit should be raised to £5,000."

Deputy Prime Minister, Dominic Raab, said: "I’m determined to reduce the obstacles families and guardians face when they are supporting vulnerable people who lack mental capacity.

"These plans will make it easier and less stressful to access small funds while maintaining vital safeguards to prevent abuse and fraud."

If your child still has a cash Child Trust Fund it's worth converting it to a JISA

Any under-18s born before 2 January 2011 would have had a Child Trust Fund automatically opened for them by the Government. These CTFs can now be converted to JISAs, and it's usually a good idea to do that with cash savings as there's more choice with JISAs and they typically pay more. 

JISAs are tax-free savings accounts that under-18s can save or invest up to £9,000 every tax year. Loughborough Building Society currently offers the highest paying JISA at 2.5% on £1 or more. For a full list, see our Junior ISAs guide.

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