Well worth rolling over

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The Independent Online
TESSAS - tax-exempt special savings accounts - were John Major's Budget innovation for savers when he was Chancellor in 1990.

They are offered by banks and building societies and pay interest tax- free, whatever your personal tax status, provided you keep the account open for five years and do not withdraw the money you put in. You can also have the interest net of basic-rate tax (net of 20 per cent after April) paid out as you go along. Break any of these rules, for example by withdrawing more than the net interest, and all the interest becomes fully taxable.

The first Tessas mature from the beginning of January. If you are one of the 4 million-plus existing Tessa savers, yours matures on the fifth anniversary of opening. The opening date will be in your deposit book, and you can expect the bank or building society to remind you of the maturity date.

You can recycle most but not all the value of your maturing Tessa into a new Tessa. All the money you put into the old one can be rolled over, but not the interest earned. This means rolling over a maximum of pounds 9,000. But if you put less than pounds 3,000 into the original Tessa, the sum can be topped up to pounds 3,000 for your new Tessa with the interest you earned.

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