Children's Tax Exempt Savings Plan

Only available through friendly societies (like us) and a great way to save tax-free for a child you care about

  • Plans start from £5 a month
  • Save for their first car, house deposit, university fees
  • Guaranteed amount on maturity, plus possible bonuses
  • Choose how long to save between 10 and 25 years

If you surrender the plan before maturity (which is the term you select when first starting the plan), you may get back less than you have paid in. Tax treatment depends on individual circumstances and may be subject to change in the future. Bonuses are not guaranteed.

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Product information

  • About this policy

    Our Children's Tax Exempt Savings Plan (or TESP for short) allows you to save tax-free in addition to a child's Junior ISA allowance. You can choose the term of the plan between 10 and 25 years which could make it the perfect option if you want to save for the medium to long-term.

    There's the option to save monthly or annual amounts, which can help to build up a tax-free lump sum for a child's future.

    Please be aware that a surrender penalty will apply if cashed in before maturity.

  • What are they?

    These plans are only available through friendly societies and are a way to save tax-free in addition to your child's Junior ISA allowance.

    Because it is a tax-free savings plan, under current legislation, the maximum you can save is £25 a month or £270 annually (this includes any tax exempt plan(s) held with another friendly society). This plan is also a qualifying life policy - more information on this can be found in our FAQs below.

    Want to save more than this? Our Children's Regular Savings Plan or Investment Junior ISA could be the perfect addition or alternative choice.

  • Who are they for?

    Anyone can have a plan or have several plans within the overall maximum levels of £25 per month or £270 annually. 

  • Why open one?

    Our Children's TESP could be the perfect way to save fixed regular amounts for a child you care about.

    Anyone can open a plan for a child, so it could be a great option for any grandparent, family member or friend that wants to save for a child's future.

Savings calculator

Use our calculator to get an instant quote about your potential savings.

If you are 16 or over and would like to apply for this plan, please head over to our Tax Exempt Savings Plan page (which can be found under regular savings).
Please enter your date of birth
Did you know we have an adult's Tax Exempt Savings Plan. Please click this link to complete the application form

See how much you could save

Please select a term between 10 and 25 years
  • Save monthly
  • Save annually
  • Please choose an amount between £5 and £25
  • Please choose an amount between £50 and £270
Please note: You can also enter the term and amount in the boxes instead of using the slider. Quotes are for illustration purposes only and what you get back depends on how your investment grows, meaning you could get more or less than this.


You might get back the following amounts, by investment growth per annum:







Please read the Key information document and Important information documents before applying for a Children's Tax Exempt Savings Plan.

How to apply

Step one

Confirm you have read and understood our Product and Key Information

Step two

Decide how much you want to save and for how long

Step three

Complete our straightforward online application

Step four

Confirm your details are correct and submit your application

Ready to proceed?

Other ways to apply

Apply over the phone

Need more information or prefer to apply over the phone? We're happy to go through any questions you have, as well as taking you through the application process over the phone. Either call us on 01226 741 000, or click the link below and we can call you back at a time to suit you.

Request an application pack

Want a bit more time to fill in your application? Download an application pack and send it back to us when you're ready. If you don't have access to a printer, we can send you an application in the post.

How it works

  • Opening a Children's TESP

    There are a number of ways you can apply, online, over the phone or by post - pick the option that is best for you.

  • How are bonuses calculated?

    Unlike banks who add interest to their accounts, we aim to add bonuses to our members' policies. Bonuses are calculated at the appropriate rate based on the child's guaranteed final amount, not the amount of premiums you pay. On maturity the child will receive the guaranteed final amount plus bonuses added during the life of the policy. Find out more in our FAQ section below.

  • Are there any guarantees?

    Providing the plan runs to its planned maturity date with all premiums paid, we will guarantee a minimum final amount for more than you have paid in (based on the amount you want to save and for how long). The final value of the plan will depend upon investment performance, but bonuses are declared each year, and these are added to the guaranteed final amount. Once added, these bonuses cannot be taken away.

  • Can I make withdrawals?

    You cannot make any withdrawals, but if your circumstances change, you can surrender the child's policy. However, the plan is designed for medium to long-term investment and the surrender value may be less than the amount you have paid in. The child may also be liable for additional tax on any investment gain. The amount of the gain may result in a reduction in the amount of any old-age relief or child tax credit being received. The payment will be made to the child on surrender or maturity.

  • What about charges?

    To cover the cost of expenses incurred in setting up the policy and maintaining it, we take a management contribution of 50% of premiums paid in the first year and in the second and subsequent years 7.5% of the annual premium amount. The charges are deducted from the overall fund and taken into account when we calculate the level of bonuses we are able to pay. 

Frequently asked questions

Our most commonly asked questions surrounding the Children's Tax Exempt Savings Plan can be found below.

Absolutely, you may choose the period over which you would like to save for a child you care about, with a minimum term of 10 years and a maximum of 25 years.

Yes, anyone can have a plan or have several plans with the overall maximum amounts of £25 per month or £270 annually. If you would like to open a plan for yourself, please see our Tax Exempt Savings Plan.

We invest in a range of different assets with the aim of providing a higher return in the medium to long-term than is achievable with a bank or building society account. Sheffield Mutual's with-profits fund is managed to provide a low to medium risk investment, appealing to anyone with a more cautious approach to investment. Our investments include property, shares of UK companies, government gilts, corporate bonds, commercial mortgages and cash.

Bonuses are calculated at the appropriate rate based on the final amount (sum assured) not the amount of premium paid and on encashment after five years subject to the conditions outlined below. The policyholder will receive the initial final amount plus bonuses added during the life of the policy.

The proportion held in each of these will vary depending on market conditions. You'll be pleased to know that we seek to adopt an ethical approach to investing and it is our policy not to invest knowingly or directly in industries relating to armaments, tobacco, gambling or pornography. 

Instead of interest, we pay bonuses on all of our with-profits products.

We invest our funds as described above and receive a return on those investments, which can vary from year to year. In March/April we review the returns achieved during the previous calendar year and then declare a bonus rate for each product type. The rate varies depending upon overall investment returns and is not therefore guaranteed to be paid at the same rate, or at all, in future years. However, once bonuses have been added to they will not be taken away, providing the policy runs to maturity or if the child dies before the end of the term.

We also try to ‘smooth’ returns over the life of the policy by retaining some of the investment return in good years to maintain bonus rates in less positive years. However, to ensure the child receives their fair share of returns on the plan over its lifetime, an additional final bonus may be paid on maturity. Payment of this type of bonus depends entirely on investment performance and the rate at which annual bonuses have been added. It is not guaranteed and, if paid, the rate may vary from year to year.

A qualifying policy is basically a life insurance policy whose terms meet a set of certain conditions. These include rules about the policy term, regularity and level of premiums paid and the minimum final amount.

Our Children's TESP is a "qualifying life policy" with a special tax status. This means you cannot pay in more than a total of £3,600 in a 12 month period into any qualifying policies you may have, either with us or any other life company or friendly society (excluding pure protection policies and protected qualifying policies issued before 21 March 2012). 

In the event of death of the policyholder (the child) before the end of the term, we will refund all premiums paid plus interest up to the date of death. Interest is calculated using the Bank of England base rate(s) that have applied during the term of the policy + 1%, though this could be changed in the future by the Society. Notice of any change will be given. If the person proposing the plan were to die, someone else could take over the payments, if there is nobody suitable, the plan could be closed and the payment would be made to the child.

If saving for a child, on maturity or surrender the payment is made to the child as the
beneficiary of the policy.

No, this plan does not include any life cover but we do offer a Tax Exempt Savings Plan with Life Insurance for children aged 11 next birthday. For more information on our life insurance products, please visit the life insurance section on the website. 

Need some further assistance? Our team would be more than happy to provide you with factual information about our products and services, so you can make your own decision about how to proceed. However, we are unable to give any financial advice or recommendations on the suitability of our products. If you are unsure, you should seek advice from a qualified financial adviser, which may incur a fee.

To comply with regulations, the Society will require a copy of the child's birth certificate, passport or a child benefit letter. We will also require confirmation of your identification and address. We’ll aim to do this using an electronic verification system, but reserve the right to ask for appropriate documentation from you, if this is not possible.

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