Tax Exempt Special Savings Account

= Tessa

A UK savings account with a bank or building society, introduced in January 1991, in which savers were allowed to invest up to £9000 over a five-year period with no tax to pay on their interest, provided that special conditions were met. Savers investing in a Tessa for the first time could deposit up to £3000 in the first year and £1800 in any subsequent year (the maximum of £1800 could only be invested in the fifth year if a reduced amount was invested in one of the previous years). Savers with a matured Tessa could invest all the capital (i.e. up to £9000) from this account in a new Tessa during the first year, provided the new account was opened within six months of the maturity date of the old Tessa. The tax exemption was lost if: (a) capital was withdrawn at any time; (b) withdrawals of interest or bonuses exceeded 80% of the total amount of these credited to the acount prior to the withdrawal; (c) the account holders' rights were assigned or used as security for a loan. Tessas were replaced by Individual Savings Accounts (ISAs) in April 1999; however, existing Tessas were allowed to continue under the same arrangements until their term expired.