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Just like ISAs, Child Trust Funds can be difficult things to understand. Effectively these are tax free savings accounts, which you can contribute up to £1,200 in any one year. They have been intended by the government to encourage people to save for their child’s future, which they will receive upon turning 18. There are, however, various Child Trust Funds available on the market, to make things a little more complicated. Here’s ten more points that you need to know about child trust funds.

1. Child Trust Funds are completely tax free - there’s no savings or capital gains tax.

2. They are available to all children born on or after 1 September 2002.

3. Upon opening a fund, the government will contribute a £250 voucher (£500 for lower income families). When the child reaches the age of seven, the government will contribute a further £250.

4. If you don’t invest the voucher within 12 months of receiving it, the government will open a stakeholder account for you.

5. Parents only receive their child’s Child Trust Funds voucher once he or she has been registered for Child Benefit. And to do this, they need to have their birth certificate. Remember, Child Benefit is available to every child, regardless of parental income.

6. Most Child Trust Funds are stock market investments which, in the vast majority of cases, perform better against cash in the long term. The total savings could go down as well as up, but over 18 years it has over a 95% chance of beating a cash investment - and it’s tax free. See ASDA Finance for an example of a stock based Child Trust Fund.

7. You can transfer a Child Trust Fund to another provider at any time, free of charge.

8. Parents, friends and relatives can top up a Child Trust Fund by a maximum of £1,200 per year, not including government contributions. Even if you only used the government contributions, and contributed nothing yourself, and your fund grew at 7%, then it would be worth £1,410 in 18 years. (Source: Virgin Money).

9. For more on Child Trust Funds, take a look at the government website.