Tax-Exempt Savings Plan (TESP)

An affordable and tax-efficient way to save regularly for the future

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What is a Tax-Exempt Savings Plan?

Our Tax-Exempt Savings Plan (TESP) is a simple product that lets you put a little away regularly over the long term. At the end of your chosen term (the 10 to 25-year period you want to save for) you get a tax-free lump sum of money to spend on whatever you want.

You can save for yourself, or for your children or grandchildren. And the money can be used to help fund anything – from holidays and travelling, university, weddings, first cars, or maybe for a boost in retirement. It’s a great way to build up savings steadily over time.

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How does our Tax-Exempt Savings Plan work?

  • TESPs are only available from friendly societies like us and anyone over 16 can buy one.
  • You can choose to save £10, £15 or £25 a month.
  • If you want to pay annually, you can save £108, £162 or £270 a year.
  • You can choose to save for at least 10 and no more than 25 years.
  • You’re guaranteed to get a tax-free amount paid back at the end of the term you choose to save for.
  • We’ll pay out more than you’ve paid in, to spend on whatever you like, as long as you make all the payments due up to the end date.
  • Your money is invested for you in our with-profits fund so you don’t have to manage it yourself.

How much could you get?

Try our Savings Calculator to find out the guaranteed maturity value that you can get with a Tax-Exempt Savings Plan. This is the minimum amount of money that you’ll get back so long as you keep up the payments for the full policy term. But remember your investment could also grow so that you get back more.

Savings Calculator

Guaranteed Maturity Value

£0

Who can take out a Tax-Exempt Savings Plan?

You can take out a policy for yourself or as a gift for the future for a child or grandchild. Children’s policies can’t mature before the child’s 16th birthday, so their policy might need to run longer than 10 years.

A TESP might be suitable for someone who:

  • Doesn’t currently have a friendly society tax-exempt savings policy or has one but wishes to maximise their allowance.
  • Wants to take advantage of a tax- efficient investment in addition to any ISA they may hold.
  • Expects to be able to maintain the payments for the full term of the policy, which will be your choice of between 10 and 25 years.
  • Would like to invest in a stocks and shares-related investment but is not prepared to take the risk of investing directly into the stock market.
  • Accepts the risks of investing in a with-profits fund.
  • Doesn't need the policy to provide a fixed sum of life cover.

A TESP might not be suitable for someone who:

  • Already has a tax-exempt savings policy with a friendly society, which would prevent you from buying this one (the maximum you can save in total is £25 a month/ £270 a year).
  • Won’t be able to keep up the regular payments throughout the term.
  • Wants an investment which has no risks to capital or growth.
  • Wants a fixed amount of life cover.
TESP Your Policy Explained
TESP Key Information Document

Your questions answered

  • You must be UK resident.
  • You must be aged 16 or older both to buy one for yourself or to buy one for a child under 16.
  • Any adult, including grandparents, can pay for a policy for a child and the child will be the policyholder. A parent or guardian must sign the application for the policy. They will be what we call the proposer, and they will act on the child policyholder’s behalf until the child’s 16th birthday.

£25 a month is the maximum monthly amount payable into tax-exempt savings policies of this type. If you want to pay an annual amount, the maximum set by regulation is £270 a year.

The other options and their annual equivalent payments are £15 a month (£162 a year) and £10 a month (£108 a year).

Each year we’ll send you a statement showing any annual bonuses declared. In the weeks leading up to the policy’s maturity, we’ll send you an update on the projected maturity value.

No. If you want to withdraw money in the policy before maturity you will need to surrender your policy completely.

If you end the policy before the term you choose, you may get back less than you invested or any gain you make could be taxable.

We take deductions from the policy at 30% of your first year’s payments and 6% of payments in the following years. These deductions are for the cost of setting up and administering your policy. They will be reflected in the amount you get back when the policy reaches the end of the term you chose, you cash it in early, or it’s closed because you stop paying into it.

If the policyholder dies, we’ll just return the payments made up to the date of death. There is no other life cover element.

If you would like to learn more about our with-profits fund, please visit the With-Profits Fund section of our Existing Members page.

There you will find the relevant documents to help you understand what the fund is and how it works.

Any other questions?

If there’s anything else you want to know or you’d like to talk through your options, please give us a call on 0333 014 6244 and we’ll be happy to help.

 

8am to 6pm Monday to Friday excluding bank holidays. Calls are recorded for training and quality purposes. Calls from UK landlines and mobiles cost no more than a call to a 01 or 02 number and will count towards any inclusive minutes.

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How to apply

Apply online

Our easy online journey makes setting up a plan quick and straightforward.

Choose this option if you:

  • Want to arrange a plan straight away
  • Understand the plan fully and feel it's right for you
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Request a callback

Our friendly team can talk you through the plan to help you decide if it’s right for you.

Choose this option if you:

  • Would like to learn more about the Tax-Exempt Savings Plan
  • Have any questions you want to ask

0333 014 6244

Monday to Friday / 8am - 6pm

Important information

  • Inflation will mean any payout will have less buying power in the future.
  • You could get back less than you have paid in if you end the policy early.
  • If you cancel your policy in the first year, outside of the 30-day cancellation period, you will get nothing back.
  • If you end the policy before the term you choose, you may well get back less than you invested, but also any gain you make could be taxable.
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