Thousands of young people are being urged to claim their ‘forgotten’ savings pots.

New figures have revealed almost 430,000 18-21 year olds have an unclaimed Child Trust Fund, worth an average of £2,000.

The scheme, which was introduced by New Labour in 2002, granted every child a long-term tax-free savings account.

The accounts were set up for every child born after September 1, 2002, with the government contributing an initial deposit of at least £250. Funds can be withdrawn once the account matures when the child turns 18.

The scheme was closed by the coalition government in January 2, 2011, and a recent student survey, conducted by university and college admission organisation UCAS, revealed approximately 430,000 people between 18 to 21-years-old have unclaimed funds in their account.

Now HM Revenue and Customs (HMRC) is urging them to act and claim their cash.

A recent survey, conducted by UCAS, asked first and second year university students about Child Trust Funds and the results showed that they were most interested to know how much money was in their account (43 per cent) and how to claim it (32 per cent).

The survey also revealed that 60 per cent of students got their information about Child Trust Funds from their parents.

Young adults and parents can search on GOV.UK to find out where their Child Trust Fund account is held.

Angela MacDonald, HMRC’s second permanent secretary and deputy chief executive, said: “Many 18-21 year olds are starting out in first jobs or apprenticeships, starting university or moving into their first home and their Child Trust Fund is a pot of money with their name on.

“I would encourage young people to use the online tool to track it down or, for parents of teenagers, to speak to them to ensure they’re aware of their Child Trust Fund. It could make a real difference to their future plans.”

There are currently 5.3 million open Child Trust Fund accounts. Young people aged 16 or over can take control of their own Child Trust Fund, although the funds can only be withdrawn once they turn 18.

More than 500,000 matured Child Trust Fund accounts have been claimed or transferred into an ISA since the oldest children on the scheme turned 18 in September 2020.

Families can continue to pay up to £9,000 a year tax-free into a Child Trust Fund until the account matures. The money stays in the account until the child withdraws or reinvests it into another account.

Sharon Davies, chief executive of financial education charity Young Enterprise, said: “We would encourage all young people to investigate if they have money which is unclaimed in a Child Trust Fund and to use it wisely.

“The investment could be placed into an adult ISA or put towards driving lessons, education or starting a business.

“The money in a Child Trust Fund has the potential to be life changing and the lack of knowledge about them shows the importance of financial education and financial planning from a young age.”

• To discuss any issues raised by this article please contact me on 01772 430000

The interest charged on late tax payments has been hiked from 7.5 per cent to 7.75 per cent – the highest rate since 2001.

This latest rise followed the Bank of England’s August interest rate rise to 5.25 per cent.

The base rate rose by 0.25 percentage points as the bank continued to respond to persistent high inflation, bringing interest rates to their highest level since before to the 2008 financial crisis.

HMRC’s late payment rates are set in legislation and are linked to the Bank of England base rate.

Late payment interest is set at this base rate plus 2.5 per cent. Repayment interest is set at base rate minus one per cent with a lower limit, or ‘minimum floor’, of 0.5 per cent.

Late payment interest is place on a wide range of taxes including income tax, national insurance, capital gains tax, corporation tax and stamp duty land tax

In a statement HMRC said: “The differential between late payment interest and repayment interest is in line with the policy of other tax authorities worldwide and compares favourably with commercial practice for interest charged on loans or overdrafts and interest paid on deposits.

“The rate of late payment interest encourages prompt payment and ensures fairness for those who pay their tax on time, while the rate of repayment interest fairly compensates taxpayers for loss of use of their money when they overpay.”

HMRC has also updated its rate of repayment interest paid on money being refunded to taxpayers who have overpaid.

Repayment interest is set at base rate minus one per cent with a lower limit, or ‘minimum floor’, of 0.5 per cent. It is now set it 4.25 per cent.

To discuss any issues raised by this article or any tax matters please contact me on 01772 430000

Businesses and individual taxpayers will have to provide more information to HMRC in the coming years.

The Institute of Chartered Accountants in England and Wales (ICAEW) says draft legislation released earlier this month indicates that additional requirements for information will be introduced over the next few years.

HMRC argues that this will help it to provide better outcomes for taxpayers and businesses, improve compliance and build a more resilient tax system.

The proposed changes will allow more information to be obtained directly from taxpayers, giving HMRC further ability to risk-assess returns and better target its ‘upstream’ compliance activity.

It is proposed that from 2025/26, employers will be required to provide more detailed information on employee hours worked via real time information (RTI) PAYE reporting.

The information to be reported will be set out in separate regulations, a draft of which has not yet been made available.

ICAEW says the draft primary legislation is “very broad”. The information does not have to be relevant to the assessment, charge, collection and recovery of income tax in respect of PAYE income.

However, it goes on to state that the information must be relevant for the purpose of the collection and management of income tax, corporation tax, or capital gains tax.

Shareholders in owner-managed businesses will also be affected. It is proposed that from the 2025/26 tax year, shareholders will be required to provide additional information via their self-assessment return.

The amount of dividend income received from their own companies will have to be reported separately to other dividend income, and the percentage share they hold in their own companies must be stated. Failure to report this information will give rise to a fixed penalty of £60.

Meanwhile, self-employed individuals will be required to provide information on the start and end dates of their businesses via their self-assessment return.

ICAEW says it is not clear whether partners will be required to advise of the dates they entered or exited a partnership, although the draft legislation provides for additional information to be included in both partnership and trustee returns.

This change is expected to apply from tax year 2025/26 onwards and failure to report will also trigger a fixed penalty of £60.

Also, ICAEW says that from August 8, 2023, companies claiming creative industry or cultural tax reliefs will be required to complete and submit an online information form.

For the audio-visual expenditure credit and the video games expenditure credit, this will apply from January 1, 2024.

The operative date relating to all other creative sector and cultural tax reliefs (film tax relief, high-end TV relief, animation tax relief, children’s TV tax relief, video games tax relief, theatre tax relief, orchestra tax relief and museums and galleries exhibition tax relief) is April 1, 2024.

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The deadline for paying voluntary national insurance (NI) contributions to top up state pension entitlement has been extended.

The move means taxpayers now have until April 5 2025 to fill gaps in their NI record from April 2006.

Announcing the move, the government said the extension “ensures no-one need miss out on the possibility of boosting their state pension entitlements.”

The original deadline was extended to July 31 2023 earlier this year, and tens of thousands of people have already taken advantage to pay voluntary contributions to HM Revenue and Customs (HMRC).

The revised deadline is expected to enable tens of thousands more to do the same.

It means men born after April 5 1951 or women born after April 5 1953 have more time to check their records and decide whether to pay voluntary contributions.

Victoria Atkins, financial secretary to the Treasury, said: “People who have worked hard all their lives deserve to receive their state pension entitlement, and filling gaps in National Insurance records can make a real difference.

“With the deadline extended, there is no immediate rush for people to complete gaps in their record and they will have more time to spread the cost.”

All relevant voluntary NI contributions payments will be accepted at the rates applicable in 2022 to 2023 until April 5 2025.

Individuals who are planning for their retirement could benefit from the opportunity to complete gaps in their NI record. Other people who may benefit include those who may have been:

• employed but with low earnings
• unemployed and not claiming benefits
• self-employed who did not pay contributions because of small profits
• living or working outside of the UK

Paying voluntary contributions does not always increase your state pension. Before starting the process, eligible individuals with gaps in their NI record from April 2006 onwards should check whether they would benefit from filling those gaps.

• Please contact me on 01772 430000 to discuss any issues raised by this article

In the final part of our series looking at exiting a family business we look at the importance of future planning

Future planning is vitally important to the wellbeing of any business and as such it is imperative that the planning process continues after any exit and takeover.

Apart from the obvious reasons of planning for the future in terms of strategy and vision, it is important that new owners, especially if a family business has been divided between two or more siblings or other relatives, understands each other individuals’ plans.

When taking over a business, everyone can be busy and there may be excitement of fulfilling a lifetime’s destiny to head up the family venture. So, all is rosy and the new family owners cannot see past the upward potential and future wealth.

However, there may already be looming problems, particularly if those owners have vastly different views on how to achieve those goals or vastly different attitudes on the commitment needed to manage the business and how to set appropriate remuneration,

There may be age gaps and consequent different views as to when to sell the business. One sibling may want to pass their share on to their own children while the other wants to sell up and see the world.

These may not have ever been issues when mum and dad controlled the business because they had the same goals and ideas and sang from the same hymn sheet.

Add the siblings’ spouses or partners into the mix and you could have vastly differing viewpoints and further problems affecting the wellbeing of the venture.

All this once again highlights the importance of good communication throughout the business as well as the role of a Shareholders Agreement, something which may not have been thought needed before.

It is a subject we’ve touched on before in this series of articles. It is important from day one to make sure everyone is clear about their expectations and requirements and how things will be handled if situations change.

Have a Shareholders Agreement drawn up by a solicitor specialising in business matters. Advice on the content and implications is needed along with guidance on the type of issues to be incorporated into an agreement.

Put simply it is a legally binding private contract between two or more shareholders that governs how a business is managed and run, but more importantly, what should happen if things go wrong.

A well put together agreement should include exit strategies in the event that one – or several – shareholders can no longer be in business together.

Other issues it can cover include how many directors there can be and how are they appointed or removed, what shares can be held and by whom, how shares are valued when sold or acquired and how to deal with shareholder disputes and minority protection.

• To discuss any issues raised in this series of articles please contact me on 01772 430000