Everything about Tax-exempt Special Savings Account totally explained
In the
UK, the
Tax-Exempt Special Savings Account (
TESSA) was a special tax-free bank account. The TESSA was announced by
John Major in his only
Budget as
Chancellor of the Exchequer in
1990 (
a budget for savings). The TESSA was intended to be a low-risk complement to the personal equity plan (
PEP) which would be attractive to a wider range of savers.
Qualification
An individual aged 18 or over was able to open a TESSA with a
bank,
building society or other
financial institution from
1 January 1991 to
5 April 1999.
Interest on the TESSA was free from UK
income tax. The favourable tax treatment of a TESSA lasted for 5 years, and it was possible to invest up to £9,000, with a maximum investment of £3,000 invested in the first year and £1,800 in each of the second to fifth years (although, if the maximum was invested in the first four years, only £600 could be added in the fifth year). Withdrawals were permitted within the first 5 years: tax relief was clawed back if any of the invested capital was taken out; withdrawals of interest didn't trigger a clawback of the tax relief.
Development
'Follow-on' TESSAs were introduced in
1995 to permit all of the capital (but not the tax-free interest) from an original TESSA to be 'rolled over' into a new TESSA. Other than permitting all of the capital in the original account to be invested in the first year, which could easily exceed the usual £3,000 first-year limit, a 'follow-on' TESSA was subject to the same conditions as any other TESSA.
Phasing out
TESSAs were replaced from
1999 by individual savings accounts (
ISAs). The final TESSAs matured on
5 April 2004, but the original capital (but not the tax-free interest) could again be 'rolled over' into a new tax-free investment through use of a
TESSA only ISA (TOISA). The TOISA was a form of cash
ISA which can be opened using either capital that was originally invested in a TESSA and that hasn't been withdrawn, or with funds transferred from another TOISA.
From 6th April 2007 there was no practical difference between TOISAs and cash
ISAs and transfers into cash
ISAs have been permitted. On 5th April 2008 TOISAs ceased being legally distinct and are now completedly interchangeable with cash
ISAs.
Further Information
Get more info on 'Tax-exempt Special Savings Account'.
|
External Link Exchanges
Do you know how hard it is to get a link from a large encyclopaedia? Well we're different and will prove it. To get a link from us just add the following HTML to your site on a relevant page:
<a href="http://tax-exempt_special_savings_account.totallyexplained.com">Tax-Exempt Special Savings Account Totally Explained</a>
Then simply click through this link from your web page. Our crawlers will verify your link, extract the title of your web page and instantly add a link back to it. If you like you can remove the words Totally Explained and embed the link in article text.
As long as your link remains in place, we'll keep our link to you right here. Please play fair - our crawlers are watching. Your site must be closely related to this one's topic. Any kind of spamming, dubious practises or removing the link will result in your link from us being dropped and, potentially, your whole site being banned. |
