IR8                                               29 November 1994

       TAX EXEMPT SPECIAL SAVINGS ACCOUNTS (TESSAs)

The Chancellor proposes in his Budget to improve the rules for 
TESSAs. Investors who have held a  TESSA  for  five years will be 
able to open a second account with the  full amount of capital 
deposited in their first TESSA, but  not the  accumulated interest.  
This will mean that they  will be  able  to  go  on getting tax-free 
interest on up to pounds 9,000, provided they leave the capital 
untouched for a further five years.

The  Chancellor's intention is to encourage people to hold on to 
savings built up in their TESSAs.

                          DETAILS

1.    The  first  TESSAs  will  mature  in  January  1996.  Interest 
earned on the account after maturity will  become taxable.  Under 
current rules investors would then be able to  open a new TESSA with 
a maximum first year deposit  of pounds 3,000.

2.    The  Chancellor proposes to increase the first  year deposit  
limit for a second TESSA to allow individuals  to invest  up to the 
full amount of capital, at most  pounds 9,000, which  they had kept in 
their first TESSA until  maturity.  Investors  who  wish to take 
advantage  of  the  increased limit  will  need  to open their second
TESSA  within  six months of the maturity of their first TESSA.

3.    People who invest less than pounds 9,000 in the first year of their 
second account will be able to go on saving over the  next four years
within the usual limits of pounds 1,800 for each  year.  All TESSAs will 
remain subject to an  overall investment  limit of pounds 9,000 and to the 
rule that a TESSA has to last for five years if the tax advantages 
are to be obtained.

4.    The  maximum first year deposit for people who  have either  
not  previously had a TESSA or who  invested  less than pounds 3,000 in 
their first TESSA will remain at pounds 3,000.

5.    The  Inland  Revenue will be consulting  the  bodies 
representing institutions offering TESSAs on  the  changes needed to 
administer the new rules.

6.    Under the Budget proposals the range of institutions able to 
offer TESSAs will be extended to include "European Authorised  
Institutions".  These are,  broadly  speaking, credit  institutions 
incorporated in other  member  States which  are  authorised to take 
deposits  anywhere  in  the European Community by virtue of the 
relevant authorisation in their home State.

                     NOTES FOR EDITORS

1.    TESSAs were introduced on 1 January 1991.  They  are special  
bank  and building society accounts  which  allow savers to receive 
tax-free interest on their savings. An individual  must be aged 18 
or over to open  a  TESSA. A TESSA  lasts  for five years and the 
maximum amount which may be invested over that period is pounds 9,000.  
After  the first  year  the maximum annual deposit  in  a  TESSA  is
pounds 1,800.

Costs

2.    The costs of this proposal will be negligible in the tax year 
1995-96, pounds 150 million in 1996-97 and pounds 160 million in 1997-98.

3.    Latest figures for the take-up of TESSAs since their 
introduction were published in an Inland  Revenue  Press Release of
12 September 1994.