This Tuesday (1 September) is a big day for the 4.4 million children in Britain who have a child trust fund (CTF) account, designed to give them a financial head start in life. From that date, children turning seven will receive a government top-up payment into their CTF. Most will get £250, though about three in 10 (those from low-income families, broadly on less than £16,000 a year) will receive double that amount.

For many children whose money is invested in shares, this will be a much-needed cash injection, because last year's stockmarket crash took a sizeable bite out of their nest eggs. By contrast, those parents who opted for a cash savings account CTF are sitting fairly pretty.

Launched in 2005, CTFs were opened for children born after September 2002, with a £250 voucher, or £500 for lower-income families.
This year, the first children to benefit from the scheme have turned seven, prompting the top-up payments, this time paid directly into the fund rather than through a voucher issued to parents. Again, children from families with a lower combined income are in line to receive a £500 payment.

Some 700,000 children a year will receive the seven-year-old top-up. If the extra £250 or £500 hasn't arrived two weeks after your child's seventh birthday, contact your CTF provider.) The government is also considering making a further payment when children reach their teens. Parents, grandparents and others can, between them, put in up to £1,200 a year tax free to help boost the fund's value.

Parents have one year in which to invest their vouchers into one of three fund types - cash, stakeholder or shares-based - which are dependent on the performance of shares and bonds. However, figures from HM Revenue and Customs show that about a quarter of parents forget or choose not to invest the vouchers, leaving the Government to select a default stakeholder fund for them instead. It is thought more than half of all the country's eligible children have stakeholder accounts.

The types of account available are:

• Cash savings accounts offered by banks, building societies and others.
• Accounts where much or all of the money is invested in shares.
• "Stakeholder" accounts - the government's preferred option - where the child's money is again predominantly invested in shares but the cash is gradually moved into less-risky investments, and charges are capped.

Children can start to decide how their CTF is managed when they are 16, and can withdraw it when they turn 18. The hope is that most will use it sensibly, putting it towards further education or a deposit on a first home.

Finally, some people will not be aware that they can move their child's account to a different provider at any time, and change the type of account.