We hope that the information below answers any questions that you may have about our Tax-free Savings Plan. If you’d like any further explanation, please don’t hesitate to get in touch.
Q. Who can apply for the Tax-Free Savings Plan?
A. Any UK resident under the aged 16-64 can apply. You can also take out a plan at any age for a child under 16.
Q. Can I take out a Tax-Free Savings Plan for a new baby?
A. Yes. Any adult can pay into a plan for any child under the age of 16. You can invest £25 per month or £270 annually per child, in addition to your own allowance. The end date of a child’s plan must be after their 16th birthday and after a minimum of 10 years.
Q. How much can I invest?
A. Invest monthly £25 or annually £270.
Q. How long does the plan run for?
A. That’s up to you, as long as it’s between 10 and 45 years, ending after your 16th birthday and before your 80th.
Q. How do you invest my money?
A. We add your money to our with-profits fund. The fund invests in a wide range of long-term investments such as fixed interest securities, commercial property and company shares. A diverse portfolio like this means that there’s less impact on the fund should any particular investment under-perform.
Q. Do I need to pay any charges?
A. The Tax-Free Savings Plan is a traditional with-profits plan, so we don’t deduct charges directly from your investment. Instead, we collect them by reducing the bonus rates. We also take into account administration and other costs before awarding any bonuses.
Q. How much is the plan worth on maturity?
A. At the end of your chosen term, you receive a lump sum (the sum assured plus bonuses) with no personal liability for income tax and capital gains tax. The exact value of the sum assured depends on your age when you take out the policy, its term and the premium that you pay. Inflation will reduce the future spending value of your investment.
Q. How are bonuses awarded?
A. Any annual bonuses that we may award to your plan depend on the fund’s performance and so are not guaranteed. Once added, these can’t be taken away. We may also give you a final bonus, which would increase the tax-free lump sum that you receive.
Q. How much are these bonuses worth?
A. We can’t guarantee to award bonuses nor can we tell you how much they might be worth. Bonuses depend on how well the fund performs, which itself depends on variables such as interest rates and the stock market.
Q. What does built-in life cover mean?
A. The built-in life cover gives you the peace of mind that, should you die before your plan matures, we’ll pay out a minimum guaranteed lump sum.
Q. I already have a tax-free savings plan with another friendly society. Can I take up your plan as well?
A. No, your total tax-free allowance is £25 per month. The National Friendly Tax-Free Savings Plan is only for £25 a month, which equals your full allowance.
Q. What if I decide to cancel my plan?
A. You can cancel your plan within the first 30 days and receive a full refund of any premiums already paid. If you cancel after 30 days and within the first year, you’ll get nothing back. If you cancel after the first year and before the maturity date, you may get back less than you’ve paid in or you may have to pay income tax on any profit you’ve made.
Q. Do I have to pay any tax?
A. As a friendly society, our with-profits fund is exempt from corporation tax and we award bonuses based on how well the fund performs. You don’t pay any income tax or capital gains tax on your maturity value. However, we do pay 10% income tax on your behalf on dividends from shares held in the fund. You can’t reclaim this. The money in your plan forms part of your estate and in the event of your death it could be liable to inheritance tax. Please note that the tax treatment of the plan may be subject to change in the future and could also depend on the individual circumstances of the plan holder.