Definitions for "TESSA"
Keywords:  isa, april, exempt, save, cease
Tax Exempt Special Savings Account. A government backed scheme introduced in 1991, where a special savings plan held by an approved institution (usually a bank or building society) will generate interest, free of income tax. TESSAs were designed to provide some tax shelter for relatively modest savings. There are a number of conditions relating to TESSAs that include a maximum annual investment and minimum holding period. These have been phased out in favour of ISAs.
Acronym for "Tax Exempt Special Savings Account". You may pay up to £9,000 into a TESSA account over a 5 year period. Provided the account is maintained for 5 years and that you withdraw no more than the interest on the account, subject to a deduction equivalent to lower rate tax, the interest is tax free. No new TESSAs may be opened after 5 April 1999, but you may continue to contribute to an old TESSA after that date. Replaced by Individual Savings Accounts.
Tax Exempt Special Savings Accounts enable UK-resident individuals to obtain a tax-free return from their savings over a five-year term. Individuals can save a total of £9,000, subject to a maximum of £3,000 in the first year and £ 1 800 in any subsequent year. Individuals can save regularly or with one or more lump sums. Any UK-resident adult may open one TESSA; a married couple may have one each. After five years the contract will cease and the capital and interest will be returned free of income tax; £3000 could then be used to commence a new TESSA.