Tessas

A question about : Tessas

I do tax returns for family and friends so I do not normaly deal with Tessas.

One lady I do the Tax Return form for has a TOISA in her name, but she said it was transferred from her husband's name into hers.

I think the transfer probably happened on her husband's death and I think this was while it was still a TESSA (rather than a TOISA).

Can anyone tell me whether TESSAs were transferrable without losing their tax-exempt status?

PAUL VARJAK

Best answers:

• Hmm... that's a very good question.
  It seems that they weren't.
  What happens if I die before the end of the five-year period?
  No tax will be charged on the interest paid up to the date of your death, but the account cannot continue as a TESSA after that date and any interest paid after that date will be taxable.
• SAVER SMURF:
  Do you know if TESSAs were transferrable before death and not lose their tax expemt status?
  I know you cannot do it with ISAs/PEPs. Just not sure about TESSAs.
  Thanks again!
  PAUL VARJAK
• A Tessa could not be held in joint name - just like ISAs. On death, the Tessa/ISA forms part of that person's estate and [unlike joint savings-accounts] can't transfer to the 'joint-named' because there can't be any. And the 'allowance' aspect is lost too. The proceeds of the closed account will be transferred but revert to taxable savings, as you would expect.
• Thank you Milarky. I thought that was the case but, from what she tells me, it seems that the transfer was made to her name. It certainly is a TOISA now!
  Will have to leave it to her to decide what to do.