Differences between Mini Cash ISA and TESSA only ISA?

RobLondon1984

Whats the differences?

Thanks

isasmurf

One exists and one doesn't exist.

TESSA only ISAs were set up to enable people to transfer matured TESSA funds into ISAs, but to keep them with their current bank/building society if they were contributing to an ISA elsewhere. Strictly speaking, there was never any need for the term TESSA only ISAs, as TESSA transfers never counted as 'new' ISA money so you could have opened a cash ISA transferred the TESSA capital into it and not made any further deposits into the ISA. This is in effect what anyone with a TESSA only ISA did, as they have always being Cash ISAs. The only difference was that the application form did not have on it a statement that you agree not to subscribe to other ISAs in the current tax year (although you could have crossed that out on a Cash ISA application form for the same effect).

Unfortunately, for whatever reason, although mainly, I suspect driven by the misunderstanding media, most people thought you could only transfer a matured TESSA into a TESSA only ISA, which was simply not true. A matured TESSA could have been transfered into any Cash ISA without it affecting your annual allowance.

The 'TESSA only' and 'Mini' labels only exist in the year in which money goes into the account. These labels in effect mean nothing to money put into accounts in previous tax years as they are only there so you, the bank and the authorities can see how much you are allowed to put into a particular account in that tax year and what other accounts you can contribute to. As all TESSAs matured 3 or 4 years ago, there are no TESSAs monies to transfer into a TESSA only ISA, and as the year in which any TESSA only ISA was opened has passed the TESSA only label no longer applies to those accounts.

Why banks still continue to offer TESSA only ISAs beats me. In my opinion HMRC should encourage them not to offer these accounts, and when they write to their customers next - as they are legally obliged to do at least once a year - to tell them their account is a Cash ISA. Hopefully the removal of the Mini/Maxi labels when/if that happens will also get rid of this redundant label.

cheerfulcat

isasmurf wrote:

Unfortunately, for whatever reason, although mainly, I suspect driven by the misunderstanding media, most people thought you could only transfer a matured TESSA into a TESSA only ISA, which was simply not true. A matured TESSA could have been transfered into any Cash ISA without it affecting your annual allowance.

Not so; many banks and building societies refused to accept transfers into cash ISAs of TESSAs which had their interest rate linked to stock market performance ( GEBs ). Not the media, but the providers, were at fault here.

ukbill69

Not sure you can get Tessa's anymore. Just stick with mini cash isa.

david78

isasmurf is correct.

Tessa only ISAs are the same as mini cash ISAs. So no difference then.