When my right hon. Friend the Prime Minister introduced tax exempt special savings accounts—or TESSAs, as they came to be called—it was understood that tax-free interest would be allowed to build up over a five-year period. For some of those accounts, the five-year period will soon be coming to an end.
I have had to consider whether this tax exemption for savings should be extended. TESSAs have been very popular, allowing many people to catch the savings habit and build a nest egg for their future. Over 4 million people have invested over £20 billion since they were first introduced.
Given their success and popularity, I have decided that all or part of the capital accumulated in a TESSA at maturity can be reinvested straight away in a new TESSA. Anyone who wants to continue to save tax-free will therefore be able to do so up to an overall limit of £9,000. This measure will cost £150 million in 1996–97.