It has been decided that the process ‘lifestyling’, where an account provider adopts an investment strategy aiming to minimise variation in the value of a CTF, should no longer be a requirement.

The consultation found that developments in the market for tax-advantaged savings for children, including the increased choice available to account holders, means that this requirement is no longer necessary to ensure children and families have access to suitable tax-advantaged savings products.

Most respondents argued that lifestyling could affect the growth and returns from a CTF, by requiring a switch towards less risky investments for at least three years before account maturity.

It was also argued that changes in the market for children’s savings meant that lifestyling would not meet the needs of customers. Rather than it being a positive choice, some respondents pointed to low levels of customer awareness of lifestyling.

Removing the lifestyling requirement could reduce CTF provider costs and have a positive impact on account holders. It could also promote more management of CTF investments.

HMRC consultation on lifestyling of CTFs, took place between 21 September and 14 December 2015.

Around six million children hold a CTF, with an estimated three quarters of these children have stakeholder accounts.

‘Lifestyling’ of Child Trust Funds Summary of Responses is here.