What next for my Tessa?
I have a Halifax TESSA which matures in November this year. Is the best option to put the initial £9,000 investment into a TESSA-only ISA or should I look for other ways of investing the capital return plus interest? SC, Weymouth.
Kim North, independent financial adviser at Pretty Financial says: You can carry on making contributions into your TESSA until it matures than if you want to keep saving in a tax-free form reinvest the capital from your TESSA (but not the interest) in a TESSA-only ISA with a maximum investment of £9,000.
This is the best option because it will not affect your annual ISA allowance, ie, you can put up to £9,000 in a TESSA only ISA and still hold either a maxi ISA or three mini ISAs each tax year. That means you can invest the interest from your maturing TESSA in a stocks & shares or cash ISA to maximise the tax free allowances available to you.
Maximum you can put in a stocks and shares Maxi ISA in tax year 1999-2000 is £7000, dropping to £5,000 for tax year 2000 and beyond, or you can split your Maxi ISA so you can put up to £3,000 in a cash (£1,000 in 2000 and beyond), £1,000 in a life assurance (£1,000) and the balance in stocks and shares. With Mini ISA. the limits are £3,000 in stocks and shares or cash and £1,000 in life assurance in 1999-2000, while for year 2000 and beyond they are £3,00 in stocks and shares, and £1,000 for cash and life insurance.
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