22 September 2021
Save for your next milestone
Whether you’re saving for your retirement, an extra special holiday or a financial gift for your child or grandchild, The Tax Exempt Savings Plan or ‘TESP’ as it is known, could be a great way to save for your next milestone.
The plan is only available through friendly societies and is an alternative way to save tax-free on top of any ISA or JISA tax-free allowance entitlement.
Anyone of any age can have a TESP, and some providers offer a life cover option.
Plans start from as little as £5 per month or £50 annually (varies with provider) up to a maximum of £25 per month or £270 annually for a term of 10 to 25 years.
You have peace of mind that, provided you pay all your payments for the full term, you will receive a guaranteed final amount (which you’ll be told at the outset) plus the prospect of added bonuses, so there will be no nasty surprises.
The guaranteed amount varies with different providers, but some, like Sheffield Mutual, offer a guarantee for more than you pay in.
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.
Saving in a TESP could be a great way to save for a financial gift for a loved one
The aim of the plan is to add annual bonuses based on the guaranteed final amount (not the amount invested) and once bonuses are added they cannot be taken away. Some providers may also offer a final bonus when the policy matures too.
As the policy is designed to be a medium to long term investment, you may get back less that you have paid in if you cash in the policy early, so be sure that you can maintain the payments for the full term.
With interest rates remaining at an all-time low, it is more important than ever to make your money work harder and to utilise your tax-free allowances. For more information, you can contact us and our team will be happy to help either via our online chat facility or over the phone on 01226 741 000. We cannot give financial advice, if you require advice you should contact a Financial Adviser, which may incur a fee.
This blog provides generic information and opinions of the writer and should not be relied upon for making investment decisions. No advice has been provided by Sheffield Mutual. If you are in any doubt as to whether a savings or investment plan is suitable for you, you should 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. Any reference to taxation is based on the writer's understanding of current tax legislation and practice, which could change in the future.