Our Products Explained – Tax Exempt Savings Plans
14.11.2018 by Jim Ker
The first in our new blog series explaining our products looks at our Tax Exempt Savings Plan or TESP. Tax Exempt Savings Plans allow people to save up to £25 per month (or £270 annually) with Friendly Societies tax-free, in addition to their personal ISA allowance.
TESPs are uniquely available through Friendly Societies, so you will not find them offered by any high street bank or building society. TESPs are a firm family favourite among our Members. Whether building up your own nest egg or saving towards a grandchild’s significant birthday they have universal appeal to those interested in saving regularly over 10 years or more.
Below are a few highlights of our TESP:
- You choose how much you pay in: pay between £15 and £25 each month (£5 to £25 for a child) or £180 to £270 if paying annually (£50 to £270 for children).
- You choose how long the plan runs: anything from 10 years to 30 years – you can even choose a date when you would like the plan to mature, i.e. for significant birthdays or anniversaries.
- Understand the value of your Plan: When opening a TESP, you will be told your Guaranteed Lump Sum – this is the value you can expect to receive at maturity before any bonuses are applied, assuming the product runs to maturity and all premiums are paid in full.
- Watch your Plan grow: Unlike a standard savings account, each year, profits are returned to Members as a bonus, which is applied to the Guaranteed Lump Sum rather than the amount paid in at that date. Bonuses are dependent on the performance of the underlying fund so are not guaranteed. Once applied, however, bonuses cannot be removed.
- Add a little extra: Additionally, anyone under 65 may add Life Cover to their plan. If the Life Cover option is taken with the plan, then you are guaranteed to receive the Guaranteed Lump-Sum plus all bonuses upon death, regardless of how many contributions you may have made.
Our next product will explain the details of our Investment ISA and how it can help you to get more out of your annual tax-free allowance.