Guaranteed lump sum plus potential additional bonuses – all tax free

Our Tax Exempt Savings Plan offers the certainty of guaranteed lump sum combined with the opportunity to earn bonuses. With life cover included, it gives you the peace of mind of knowing that a lump sum would be paid out even if you died before the end of 10 years.

Save a fixed amount of between £9 and £25 a month for a 10-year period. You can get your money back before 10 years if you really need to (as long as at least a year has passed), but you might get back less than you’ve paid in.

How it works

You choose a regular amount to pay in for 10 years. Your money goes into a fund that’s invested in bonds, stocks and shares, and property.

HMRC has set maximum premiums that can be paid each year into friendly society tax exempt plans. You must choose a premium to pay for the whole term of the policy starting at £9 monthly or £100 yearly, up to the maximum of £25 monthly or £270 yearly.

The life assurance is automatically covered by the amount you pay in – there’s no separate payment needed.

The list of monthly or yearly premiums available is shown in the table below.

At a glance

  • Save a fixed monthly amount for 10 years.
  • Choose to pay between £9 and £25 a month.
  • Receive a guaranteed minimum lump sum, with additional bonuses depending on the investment performance of the fund.
  • Pay no tax on the lump sum you receive.
  • If you die before 10 years has passed, a guaranteed sum will be paid out to your next of kin.
  • After the first year you can take out your money if you need to, but may get less back than what you’ve paid in.

Monthly Payments

Yearly Payments

Guaranteed Return

£9.00 £100 £1,000
£14.00 £150 £1,500
£18.50 £200 £2,000
£20.50 £220 £2,200
£25.00 £270 £2,700

 

The returns are only guaranteed as long as you keep making your payments.

Depending on its performance, you may receive bonuses on top of the guaranteed minimum return.

Anyone under 60 can apply.

  • Details
  • Fund
  • FAQs

Please read through these documents to make sure the Tax Exempt Savings Plan with Life Cover is right for you.

Q.1 What is a Tax Exempt Savings Plan?

The Tax Exempt Savings Plan (With or Without Life Cover) is a 10 year with-profits endowment policy, which meets HMRC requirements to be exempt from tax. The Plan provides:

  • A guaranteed minimum return as long as the Plan is paid in full to the end of the 10 year term
  • Life cover – this is an amount paid if you die before the end of the Plan term (With Life Cover plan only)
  • Investment into a tax exempt fund (Note that the Fund pays the tax credit on dividends received which cannot be reclaimed)
  • Bonuses which once added also become guaranteed
  • Tax-free payment at maturity (or on death during the term)
Q.2 Who can take out a Plan?

The Tax Exempt Savings Plan (With Life Cover) is available to anyone less than age 60, including children.

Q.3 What if I die before maturity?

WITHOUT LIFE COVER

If you die during the term of the policy we will refund all premiums paid to the date of death, plus interest at the Bank of England base rate, or the value that would have been payable on surrender, if greater.

WITH LIFE COVER

As long as you have paid all your premiums to date, the plan includes a guaranteed sum assured, which will be paid, together with any declared bonuses, if you die before the end of the 10 year term. There may also be a terminal bonus.

Q.4 How much can I pay in?

HMRC has set maximum premiums that can be paid each year into friendly society tax exempt plans.

You must choose a premium to pay for the whole term of the policy, with a minimum of £9 monthly or £100 yearly, and a maximum of £25 monthly or £270 yearly.

The list of premiums available is shown in the table above. Please note that if you are between 50 and 60 years old at the start of the policy, the minimum premium is £18.50 monthly or £200 yearly.

Q.5 How do I pay my premiums?

Premiums are paid by monthly or annual standing order, or by sending a cheque.

Q.6 What if I stop paying the premiums?

The policy is for a fixed term of 10 years. No part withdrawals can be made and the premium amount and term cannot be altered. You can stop paying premiums and surrender the Plan, but:

  • You will lose the benefit of the guaranteed minimum return and the life cover.
  • You may get back less than the amount you have paid, particularly in the early years.
  • If you surrender the Plan in the first year you will get nothing back.
  • If you miss a premium you will be allowed 30 days to pay it, after which the policy will be closed and if you are entitled to a surrender value this will be paid to you.
Q.7 How is my money invested?

Your money goes into our With Profits Fund and the underlying assets are currently invested in Freehold Property, Equities, Corporate Bonds, British Government Securities and Cash.

Q.8 What are the charges?

The charges are not fixed and depend on the expenses incurred by the Society, but the Society expects to take 60% of the first year’s premium and 4% of each subsequent year’s premium to cover the initial set up and on-going costs of administration and surrender expenses, and an additional charge for providing the life cover. These charges are taken into account when declaring bonuses and are not paid separately by you. The table below provides examples of the effect of the charges on the possible surrender and maturity amounts. This example applies to all ages for which the Plan is available. The premium used is £18.50 per month.

Q.9 What might I get back at the end of the term?

If you survive to the end of the 10 year term, you will receive your maturity value. This comprises the initial guaranteed sum assured plus any annual bonuses that have been declared during the term. There may also be a terminal bonus. Bonuses will be declared on a basis recommended by the Actuary, as a result of the Society’s investment performance and annual valuation.

The figures below show what maturity value you might receive at the end of the term, taking into account the guaranteed sum assured.

WITHOUT LIFE COVER
If investments grew at 2% a year you would get back £2,230.
If investments grew at 5% a year you would get back £2,550.
If investments grew at 8% a year you would get back £2,950.

WITH LIFE COVER
If investments grew at 2% a year you would get back £2,160.
If investments grew at 5% a year you would get back £2,490.
If investments grew at 8% a year you would get back £2,910.

These figures are only examples and are not guaranteed – they are not minimum or maximum amounts. What you receive depends on how your investment grows. You could get back less or more than this.

The rates of growth used in these examples are the standard rates as prescribed by the Financial Conduct Authority for this type of investment.

Don’t forget that inflation would reduce what you could buy in the future with the amounts shown.

Q.10 How do charges and expenses affect my investment?

The table below shows the impact that charges have on the policy proceeds.

WITHOUT LIFE COVER

WITH LIFE COVER

Q.11 What are the deductions for?

The deductions include the cost of life cover (where applicable), expenses, charges and any surrender penalties and other adjustments. The last line shows that over the full term the effects of the total deductions could amount to £377.

Putting it another way, if the growth rate was 5.00% a year, which is in no way guaranteed, this would have the effect of reducing it to 2.26% a year.

Q.12 Do you pay a commission to anybody?

If you are a member of a lodge your Lodge Secretary will receive a one-off payment of £2 after this policy has been in force for one full year. This is paid from the deductions included in the above example. We do not pay commission to any other third parties.

Q.13 How do I start a Plan?

Starting a Tax Exempt Savings Plan is simple. Once you have read and understood these ‘Key Features’:

  • Decide how much you want to save each month or year.
  • Complete the Application Form.
  • Complete the standing order form if you want to use this method of payment.
  • Post your application / standing order forms to us.
  • You will need to provide us with proof of your identity and address (eg passport & recent utility bill). Please see the Proof of Identity list on the website or contact us for further details.

How much could you get?

At the end of 10 years you’ll receive an initial guaranteed sum plus any bonuses that have been added. Because these bonuses are linked to the investment performance of the fund, it’s impossible to tell you the exact amount.

Our charges are taken into account in the bonuses, so there are no separate fees to pay.

If you need financial advice

Should you be under any doubt as to whether this product is suitable for you we recommend that you seek the advice of an Independent Financial Advisor (IFA). If you do not have a financial advisor you can find details of a local financial advisor by telephoning IFA Promotion on 020 7833 3131 or via www.unbiased.co.uk. Using the services of a financial advisor may incur charges, please confirm this with the individual financial advisor.

Terms and conditions apply to our Tax Exempt Plan. For more information visit the product's T&Cs page or read the Tax Exempt Plan Key Facts Brochure.

Ready to apply?

If you’ve read through everything and you’re happy our Tax Exempt Savings Plan is what you're looking for, let’s get your application started.

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