TESSA

acronym Also written TESSA (Business World) Short for tax exempt special savings account, a special type of savings account for those who are exempt from income tax in the UK, from which tax on the interest earned is not deducted at source. Etymology: The initial letters of Tax Exempt Special Savings Account. History and Usage: The Tessa was announced as a 'wholly new tax incentive' by the then Chancellor John Major in the April 1990 budget; the accounts themselves were not to be operational until January 1991. Until that time, all savers making use of banks and building societies in the UK (including, for example, children and pensioners) were paying tax at source on the interest on their savings, whether or not they were in fact liable to income tax. The Tessa scheme allows the holder of one of these special accounts to earn tax-free interest on savings up to a total of ø9,000 accumulated over five years. Almost immediately after the Chancellor's announcement, the accounts became known by the pronounceable acronym Tessa, which was often treated in advertising as though it were a girl's name. No doubt the full name had been chosen with this in mind (the s of special, for example, was essential to avoid the pronunciation /--/, so the less-than-essential word special was included). You may already be able to find TESSA-style accounts on the market, even though TESSAs won't officially start until January 1991. Which? May 1990, p. 249 The first Tessa--or Tax Exempt Special Savings Account--to be launched since the Chancellor introduced them in the Budget, it offers 13 per cent tax-free for 5.5 years. Guardian 9 June 1990, p. 12