Insights

19th December 2023

Are you having trouble finding the perfect gift for your child or grandchild? Or are you interested in surprising your loved ones with a gift that will bring them joy for years to come? If so, a Tax-Exempt Savings Plan (TESP) may be the perfect gift to give.

Providing a nest egg for the future can help give your loved ones the best start in life, and a TESP is an affordable and tax-efficient way to save regularly for their future. The money you’re putting into your plan can be spent on anything, and it's tax-free.

How does it work?

TESPs are exclusive to friendly societies, like us. Anyone aged 16 or over can buy one for themselves or they can pay for a policy for a child, and the child will be the policyholder.

You can choose to contribute £10, £15 or £25 a month to your plan. Or, If you want to pay annually, you can pay in £108, £162 or £270 a year. Even though £25 is the maximum you can put aside tax-free with a TESP, this can be split across multiple policies as long as they don’t combine to be over £25 a month.

This means you could contribute to multiple policies for loved ones, without any effect on your own eligibility. This is as long as the person you are buying for does not exceed the above maximums across all TESP policies in their name.

When you take one out, you’ll choose the number of complete years you want it to run for before it pays out to the child, and this will be between 10 and 25 years. If the child is under 16 at the end of the policy term, it will continue until they have reached 16.

What can it be used for?

Your child or grandchild has the freedom to spend their savings on whatever they’d like. This may be used toward a first car, university funds or a housing deposit. It’s a friendly way to put away some money for your loved one’s future, steadily and securely, as long as you make payments for your full period. Our guaranteed maturity value means you will get back more than you paid in to the policy at the end of the term.

Ready to give the gift of TESP?

If you’re keen to give a unique gift to your loved ones this year, our online application process is quick and easy! You can apply here.

Or if you’d like to learn more about TESPs and to talk through your options, please give us a call on 0333 014 6244 and we’ll be happy to help. You can also find more information on our dedicated TESP page.

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