Four Million Savers Confused By TESSA Choices

Four million TESSA investors don't know the rules on reinvesting their maturing TESSA funds and one fifth¹ (21%) of the UK's five million TESSA holders don't know even when their fund matures, HSBC warned today.

Some 16320 billion of TESSA funds are due to mature in 2001 - 885 times larger than the UK's biggest ever National Lottery win of 16322.6 million pounds². However, few TESSA-holders know that they can reinvest their TESSA capital in a TESSA-only ISA - potentially increasing their tax-free savings allowance by 1639,000 on top of the usual 1637,000 ISA limit.

Savers have only six months to roll their capital over into a TESSA only ISA, or they will lose the allowance - and may have to pay hundreds of extra pounds in tax on their savings each year.

"Many savers don't know when their TESSA matures, and fewer still know about the special tax-free allowance for rolling over their capital," said Alan Gadd, head of savings and investments at HSBC. "The special allowance is a valuable tax-break but if TESSA savers don't claim it within six months, they will lose it."

Technical details

1. The research was carried out by MORI for HSBC in December 2000 among 575 TESSA holders.
2. Camelot.