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IT IS NO LONGER POSSIBLE TO START A NEW TESSA. EXISTING TESSAS CAN BE CONTINUED TO MATURITY, INCLUDING THE ADDITION OF NEW MONEY WITHIN THE NORMAL LIMITS.
The information below is left as a matter of record. There is a useful twist for moving maturing TESSAS into ISAs. Details in the ISA page.
OLD ARTICLE
TESSAS are tax free deposits with a life of five years.
If you maintain deposit funds you should really have a TESSA as the interest rates are normally very competitive for the amount of investment.
You lose the benefits if you touch the capital, but you are able to access it if needed. A good home for emergency fund money.