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Financial > Investments > TESSAs
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TESSA - Tax Exempt Special Savings Account
TOISA - TESSA Only ISA
These savings schemes were introduced in 1990 to encourage Britons to save more and spend less.
TESSAs were all cash deposit accounts and
if you kept the account open for 5 years all of the interest earned was
free from UK Income Tax.
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Banks, building societies and other licensed deposit takers competed to offer attractive rates of interest because your savings would be left with them for a long period and so it was common to find that a higher rate of interest could be obtained from a TESSA than from any other form of cash deposit or savings account.
Rates of interest were very high in 1990 and so the Inland Revenue (now Her Majesty's Revenue and Customs) rationed the amount of money that anyone could save in a TESSA from year to year.
TESSAs were closed for new investments in 1999 with the advent of the ISA, and savers were allowed to keep their existing TESSA until it matured 5 years after the first deposit had been made.
If your TESSA matured before 6th April 1990 you were only allowed to 'roll over' the total of the deposits that you had made into a fresh TESSA for another 5 years - and you had to withdraw the interest that you had earned.
From 6th April 1990 a special concession was granted allowing maturing TESSAs to be transferred into a TESSA only ISA, known as a TOISA, and for those savings accounts the accumulated interested could also be transferred.
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