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News
PEPs Come Under ISA Umbrella
Personal equity plans (PEPs) are no more. On 6 April 2008, all PEPs became stocks and shares ISAs and the PEP rules disappeared.
The move was long overdue: PEPs and stocks and shares ISAs had shared virtually the same investment rules for some years, although no new contributions have been possible for PEPs since April 1999.
Along with the PEP's demise, a few other helpful changes to ISAs came into effect this April:
• The distinction between mini-ISAs and maxi-ISAs, which created much confusion, has been removed.
• It is now possible to transfer from the cash component of an ISA to the stocks and shares component. Switches in the opposite direction are still not allowed.
• The maximum investment has been increased to £7,200 per tax year. Of this, up to £3,600 (previously £3,000) may be made into the cash component.
Some things have not altered. ISAs continue to enjoy important tax advantages, including:
• Freedom from UK income tax on any dividends received, although UK tax credits can no longer be reclaimed.
• Freedom from UK income tax on interest from fixed-interest securities in the stocks and shares component or deposits in the cash component.
• Freedom from UK capital gains tax.
• Nothing to report on your tax return.
These tax benefits mean that ISAs should usually be the starting point for any non-pension investment
or regular savings you make. While the maximum yearly investment may be modest, by systematically using your full ISA allowance, you could build up a substantial fund largely free from UK tax.
Just because ISAs enjoy tax advantages does not mean that the investments within them can be neglected. With the new rules now in place, this may be a good time to undertake a review of your ISAs and (former) PEPs. We can advise you on possible fund changes and the options for bringing all your plans under one umbrella.
The value of tax reliefs depends upon your individual circumstances. Tax laws may change.
The value of investments and the income from them can go down as well as up and you may get back less than you invested.
Personal equity plans (PEPs) are no more. On 6 April 2008, all PEPs became stocks and shares ISAs and the PEP rules disappeared.
The move was long overdue: PEPs and stocks and shares ISAs had shared virtually the same investment rules for some years, although no new contributions have been possible for PEPs since April 1999.
Along with the PEP's demise, a few other helpful changes to ISAs came into effect this April:
• The distinction between mini-ISAs and maxi-ISAs, which created much confusion, has been removed.
• It is now possible to transfer from the cash component of an ISA to the stocks and shares component. Switches in the opposite direction are still not allowed.
• The maximum investment has been increased to £7,200 per tax year. Of this, up to £3,600 (previously £3,000) may be made into the cash component.
Some things have not altered. ISAs continue to enjoy important tax advantages, including:
• Freedom from UK income tax on any dividends received, although UK tax credits can no longer be reclaimed.
• Freedom from UK income tax on interest from fixed-interest securities in the stocks and shares component or deposits in the cash component.
• Freedom from UK capital gains tax.
• Nothing to report on your tax return.
These tax benefits mean that ISAs should usually be the starting point for any non-pension investment
or regular savings you make. While the maximum yearly investment may be modest, by systematically using your full ISA allowance, you could build up a substantial fund largely free from UK tax.
Just because ISAs enjoy tax advantages does not mean that the investments within them can be neglected. With the new rules now in place, this may be a good time to undertake a review of your ISAs and (former) PEPs. We can advise you on possible fund changes and the options for bringing all your plans under one umbrella.
The value of tax reliefs depends upon your individual circumstances. Tax laws may change.
The value of investments and the income from them can go down as well as up and you may get back less than you invested.