Tax Exempt Savings Plans

Friendly Societies are generally no different from other mutual insurance companies, but they have one particular tax privilege...

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Friendly Societies are generally no different from other mutual insurance companies, but they have one particular privilege. Qualifying savings contracts for up to £25 per month are tax privileged in the same way as ISAs and Child Trust Funds (“CTFs”). No tax is paid on the investment income generated (although dividend tax credits cannot be reclaimed).


To qualify, the savings contract must run for 10 years, and include a small element of life insurance. For a plan taken out with us 10 years ago, the £3,000 saved has grown to about £4,120 – without the tax break, it would only be £3,960. (Past performance is no guide to future returns.)


Taking out a savings plan with a Friendly Society does not prevent you from taking out an ISA in the normal way. Adults can choose between a 10 year plan where they have the option to leave the money in for further growth, or a longer plan which pays out on the chosen maturity date (which must be before attaining age 65, or 60 for smokers). Children can have Friendly Society plans as well as CTFs – ours is available up to age 15, so includes children born before the CTF came in (September 2002). The plan runs through to age 25 but can be cashed in at age 18 or 21 if it has been running for 10 years. Until age 18, the premiums are paid by the child’s sponsor who can be a parent, grandparent or other relative. The £25 premium limit applies to the child, not the sponsor.