ISA
What are TESSA and PEPs?
Tax-exempt special savings accounts (TESSAs) and personal equity plans (PEPs) were the tax-free savings schemes that you could invest in before the government brought in ISAs on 6th April, 1999.
TESSAs let you invest in bank and building society savings accounts, (the equivalent of a cash ISA) PEPs let you put your money into stocks and shares (the equivalent of a stocks and shares ISA).
If you have a PEP or TESSA that you bought before 6th April, 1999, you can keep the account, although you cannot put in any new money into existing ones.
What happens if you have a PEP?
Although you've not been able to put in any new money since 6th April 1999, any returns you get can be re-invested in the PEP. You can also transfer part, or all, of any PEP to another PEP manager. You can transfer it to a stock and shares ISA but you will lose your tax-free PEP allowance and will also use up your stocks and shares ISA allowance for that tax year.
What happens if you have a TESSA?
When it finishes its five-year term, you can transfer the capital - but not the interest - from your TESSA into a special 'TESSA-only' ISA to earn a competitive rate of interest.
Although you can transfer some of your TESSA money into a mini cash ISA or the cash component of a Maxi ISA you will also lose your TESSA-only ISA allowance for that tax year.
Remember that you can only invest £3,000 in cash in an ISA, but you could have up to £9,000 in a TESSA.
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