The amount that can be paid into a tax-free Child Trust Fund each year will rise by 1% from £4,080 to £4,128. Around 6m children hold a Child Trust Fund (CTFs) and around 4.7m of these accounts are stakeholder CTFs.

The current requirement to use a ‘lifestyling’ investment strategy is meant to minimise the variation in capital value of the account caused by market conditions and affects stakeholder CTFs, but this requirement will be removed from 6 April 2017. This will mean that holders will no longer incur one-off and ongoing costs for the use of lifestyling, which had to be in place before a child reached 15 years of age.

Other minor updates will also be made to take account of changes to the regulation of certain financial institutions, child protection and terminal illness.

The rules on transfer of accounts will also be updated to reduce the information that must be passed between account providers on the transfer of an account.

The changes will be amended by secondary legislation.

Further details on the changes to Child Trust Funds is available here