The tax office is using UK Savings Week as a prompt to remind young adults that they could have money in the government-backed savings accounts.

CTFs are long-term, tax-free savings accounts and were set up for every child born between 1 September 2002 and 2 January 2011, with the government contributing an initial deposit of at least £250.

Families can pay in up to £9,000 a year tax-free into a CTF until the account matures when the child turns 18.

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 Young people aged 16 or over can take control of their own CTF, although the funds can only be withdrawn once they turn 18.

CTFs were replaced by Junior ISAs in 2011, with parents given the option to transfer cash in a CTF into a Junior ISA. More than 500,000 matured CTF accounts have been claimed or transferred into an ISA since the oldest children on the scheme turned 18 in September 2020. But many CTF accounts remain dormant and forgotten.

Young adults or their parents can search on GOV.UK to find out where their CTF 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.”

Myron Jobson, senior personal finance analyst at Interactive Investor, said: “Many young adults might not be aware that there is a cash pot in their name waiting to be claimed. With the typical CTF valued at £2,000 this cohort could be sleeping on a decent amount of money that could boost their financial resilience amid the cost of living crisis.

“In many cases, CTFs have been forgotten along the way as Junior ISAs took centre stage. But the value of CTF could be eroded the longer they are left untouched because of charges levied on the account. The National Audit Office estimates that CTF providers could be earning collectively up to £100m per year through charges on accounts – so it pays to act quickly.

“If you know the provider where the Child Trust Fund is held, the first port of call should be contact them directly. If you don’t, you can ask HMRC. They can tell you where the account was originally opened.

“For the youngest holders, there are still six years before their Child Trust Fund reaches maturity. If you hold a Child Trust Fund for your child, it is worth considering transferring to a Junior ISA. It is a no brainer in most instances as Junior ISAs tend to have better rates on cash savings, more investment options and lower charges.”