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Child Tax-Exempt Savings Plans

Did you know that Children's Tax-Exempt Savings Plans (TESPs) also provide a long-term, tax-free way to save for your children's future?

Click here to find out more about a tax-efficient way to build up a nest-egg for your child in addition to a Junior ISA, and compare providers.

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Child Tax Exempt Savings Plans (TESPs)

Compare Child Tax Exempt Savings Plans

Read the latest Reviews on Child Tax Exempt Savings Plans (TESPs)

One way to build up a tax-free lump sum is by investing in a Tax-Exempt Savings Plan (TESP). TESPs are offered by Friendly Societies and give you a tax-efficient way of maximising your savings, receiving a lump sum at the end of the term. As you have a tax free savings allowance (up to £25 per month) in addition to your Individual Savings Account (ISA) and Junior ISA allowance, Child TESPs can be used alongside Junior ISAs.

The conditions of the savings plan vary according to provider, but common features include:

Stock market-based investment
No Capital Gains and Income Tax
The option to choose the length of your term (though there may be a minimum or maximum limit)
A maximum and/or minimum limit on how much can be saved per month (e.g. £15-£25)
Guaranteed minimum assured lump sum

Click here for our Child Tax Exempt Savings Plan comparison table

While tax-free savings plans can seem like a simple and straightforward way to build cash for the future, it is essential to make sure you understand the terms of your provider's plan - and any risks involved - before committing to investing long-term.

The primary risk of a TESP is the uncertainty of the stock market. Even after 10 years of investing the maximum amount per month, the value of your lump sum could be far less than expected, or even make you a loss.

Other considerations are any charges you will have to pay during your term. Make sure to factor in any annual management charges, policy fees or life cover charges when assessing how much your lump sum will be worth. Lastly, it is a good idea to look into what penalties you might incur if closing the plan early, to fully understand the degree of flexibility you will have.

Compare Adult Tax Exempt Savings Plans

Savings Plan Provider

Min. monthly investment
Max. monthly investment
Product
Reviewed

Info

Tax Exempt Bonus Plan
£10
£25
Read Shepherds Friendly reviews

Scottish Bond

£15
£25

Read Scottish Friendly reviews

Tax Exempt Savings Plan

£25 (£15 if applying online)
£25
Read Foresters Friendly reviews

Child Tax Exempt Savings Plans

Due to the recent scrapping of Child Trust Funds (CTFs), babies born from January 2011 onwards are no longer eligible for a CTF but may open a Junior ISA instead.

One way to save for your child in addition - or instead of - a Junior ISA are Child TESPs offered by friendly societies. Child TESPs offer parents a simple way to save up to £25 for each family member per month, though an exception to this limit is Shepherds recently-launched Young Saver Plan, which allows contributions from £7.50 to £100 per month.

Child TESPs can help you build up a lump sum for any child through small regular payments. You choose when the money is available for them, but the policy must run until they’re at least 16 and run for a minimum of 10 years.

Click here for our Child Tax Exempt Savings Plan comparison table

Under current tax laws, Child TESPs invest your money in a fund that grows free of any income or capital gains tax AND the lump sum the child receives will be free of personal income and capital gains tax.

TESPs are available for every member of the household so a family of four could save up to £100 a month tax-free and, provided the TESPs have been set up in the parent's names, the money remains firmly under their control. In addition, the flexibility of TESPs mean that they can be set up to mature at different points in a child's life.

Caution- These plans are invested in shares, so in common with other investments of this type its value can fall as well as rise and it is possible to get back less than was paid in.

Other ways to save for your children:

Junior ISAs

Children's Stakeholder Pensions

Individual Saving Accounts (ISA)

Unit Trusts for Children

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Alternatives to CTFs - Tax-Exempt Savings Plans
Did you know there are alternatives to the CTF that offer the same tax-free savings? Tax-Exempt Savings Plans (TESPs) can help you build up a lump sum for your child through small, regular payments. Your fund grows free from any income or capital gains tax, and can be used to save for children of all ages. Click here for more information about TESPs, and specific plans offered by friendly societies.

Radcliffe & Newlands
Lump Sum Investments

Puzzled by lump sum investing? Get help from qualified investment professionals. Click here for more information.

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Interesting Fact

Child Stakeholder Pensions

Pensions for children are growing in popularity as an alternative way to provide for your child's future.

With people increasingly needing to take responsibility for their own retirement, a pension could make sure your child is taken care of - and its long-term nature means fantastic growth. Click here to find out more.

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Child Tax-Exempt Savings Plans

Did you know that Children's Tax-Exempt Savings Plans (TESPs) also provide a long-term, tax-free way to save for your children's future?

Click here to find out more about the most tax-efficient way right now to build up a nest-egg for your child, and compare providers.