Child Taxation: 6. Friendly Society Savings Plan

Published / Last Updated on 03/08/2021

The history of friendly societies and collective help groups goes way back in UK history.  For example in the 18th century you would have found local societies e.g.  of farm workers that had set up a ‘cow society’ so that if one of their members lost a cow, it was insured collectively by them all paying into a mutual pot.  The same for local parish burial societies and so on.

The French revolution with “liberté, égalité, fraternité” invoked fears in the UK of uprisings against the Monarchy.  As well as giving rise to establishing a new national anthem “God Save the King”, it also brought about various items of legislation such as the Friendly Societies Act 1793 to outlaw unions but to legalise and force registration of other 'friendly' society groups e.g.  Shepherds Societies (insuring your sheep), Cow Societies and Burial Societies et al.  The Friendly Society was born.

Through the Victorian period, these developed with many moving towards either into insurance societies e.g.  Legal and General Assurance Society and all the High Street Building Societies we know today.

Various ‘friendly’ society acts were passed over the years in 1793, 1855 and 1896 to then be amalgamated into one Friendly Society Act (1974).

Friendly Society Savings Plan For Children (adults can have them too).

Minimum premium £25 per month (total £270pa) or slightly more at £300pa if one annual payment.

Minimum term 10 years to make the plan a ‘Qualifying Policy’ meaning no income taxes or capital gains taxes are payable, it will pay out to your child tax free provided it is not cashed in or surrendered early potentially losing it’s tax free ‘qualifying’ status.

If you are a tax payer and in particular a higher rate tax payer, it makes tax sense to invest £300pa in a Friendly Society Savings Plan for your child.

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