Save For Your Next Milestone

Do you have a savings goal in mind? Perhaps you are trying to put money towards your retirement, a dream holiday or as a gift for your child’s 18th birthday. 

Whatever you are saving for, choosing the right plan can make all the difference. A Tax Exempt Savings Plan (TESP) is an efficient way to grow your money. It offers a guaranteed tax-free amount upon maturity and the potential to earn additional bonuses during the plan’s lifetime. Bonuses will depend on investment performance during the term of the policy and are not guaranteed.

Tax Exempt Savings Plans are a type of product that can only be offered by friendly societies like Sheffield Mutual. By choosing this plan, you can gain exclusive access to tax-free savings on top of any contributions made to your ISA or Junior ISA.

How Can a Tax Exempt Savings Plan Help Me Save?

This article will explain how our members can use a Tax Exempt Savings Plan to help them save towards their next significant milestone. We will be exploring topics like:

• What is a Tax Exempt Savings Plan?

• How Can My Plan Help Me Save?

• How Much Can I Contribute to My Plan?

• How Long Will My Plan Take to Mature?

• Can I Withdraw from my Plan Early?

Before committing to any investment strategy, please read our Savings Plan Information Pack and our Key Information Document to ensure you have all of the information you need to make an informed decision.

What is a Tax Exempt Savings Plan?

A Tax Exempt Savings Plan (TESP) is exclusively available through friendly societies like Sheffield Mutual. Since we don’t have shareholders directing our strategy, we can offer unique society savings plans, allowing our members to utilise tax-exempt policies and receive tax-free returns upon maturity.

To apply for a Tax Exempt Savings Plan, simply choose how much money you would like to invest every month and how long you want to invest. After receiving this information, we can generate your minimum guaranteed return (called your ‘Sum Assured'), which will be paid when your plan reaches maturity.

How Can My Plan Help Me Save?

There are many reasons why a Tax Exempt Savings Plan is a smart choice for medium and long-term savings.

The first is the fixed term. A Tax Exempt Savings Plan lets you select an investment period of anywhere from 10 to 25 years, so it’s perfect for long-term planning, including retirement, milestones or setting aside savings for when your children go to university or leave home.

Second is the amount. Because you can choose your investment rate, ranging from £5 to £25 a month (or £270 annually), you will always know the minimum guaranteed value you will receive upon maturity.

Finally, this plan enjoys tax-free status, meaning you can enjoy 100% of your plan’s profits. If that wasn’t enough, this plan also offers the chance to earn additional bonuses provided in line with market performance. Although the plan does qualify for a tax free status, tax treatment depends on individual circumstances and may be subject to change in the future.

Using our Tax Exempt Savings Plan calculator, you can work out how much money you will have set aside in 10, 15, 20 or even 25 years, allowing you to plan comfortably knowing that your money will be waiting for you.

How Much Can I Contribute to My Plan?

Under current UK legislation, the maximum an individual can contribute to a TESP is £25 per month or £270 for an annual payment. This means if you were to invest a maximum £25 a month for a maximum length of 25 years, you would have a total investment amount of £7,500. In this scenario, your approximate guaranteed value (or ‘Sum Assured’) would be £9,519 as per our calculator, an increase of £2,019 before adding any bonuses.

Please note: this example is for illustrative purposes only, if you choose to take out a TESP you will be provided with a ‘Sum Assured’ specifically for you.

How Long Will My Plan Take to Mature?

A Tax Exempt Savings Plan allows you to choose the length of your investment, meaning you can customise a plan to suit your savings goals.

However, the plan requires a minimum term of 10 years and allows up to a maximum of 25 years. If you want to explore options outside the Tax Exempt Savings Plan, consider our Regular Savings Plan or an Investment ISA.

Can I Withdraw from my Plan Early?

Unfortunately, you cannot withdraw from a TESP early. If your circumstances change and you are unable to continue making payments, you do have the option to surrender your plan. However, depending on market conditions, surrendering your plan early could result in you receiving less money back than you invested. 

Plan For Your Future Today

Start working towards your savings goals today with a friendly society savings plan from Sheffield Mutual. If you are interested, you can apply for our savings plans online, by phone post or by calling one of our helpful team members on 01226 741 000.

This blog provides generic information and the writer's opinions and should not be relied upon for investment decisions. Sheffield Mutual has provided no advice. If you doubt whether a savings or investment plan suits you, consider contacting a financial adviser for advice. If you do not have a financial adviser, you can get details of local financial advisers by visiting www.unbiased.co.uk or www.vouchedfor.co.uk. Advisers may charge for providing such advice and should confirm any costs beforehand.