Punishing Pep investors for saving too well

Article Abstract:

The United Kingdom government is planning to replace personal equity plans (Peps), which have tax benefits, with individual savings accounts (ISAs). Investors should benefit from the simplicity and flexibility of ISAs, but some Pep investors will be hit by a ceiling of 50,000 pounds sterling. The number of Pep investors in this position is estimated at 750,000. Investors who have sought to repay mortgages through Peps will be especially affected. ISAs can be used for a wider range of assets than is allowed for Peps, and investors can take out funds from ISAs when they like without losing tax benefits.

Savings

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Make the most while you can

Article Abstract:

The United Kingdom Jul 1997 Budget could bring in tax changes affecting saving schemes such as tax exempt special savings schemes (Tessas) and personal equity plans (Peps). Tax relief for Peps could be restricted to the basic rate of tax, or the two schemes could be abolished. The goivernment plans to introduce a new savings scheme called the Individual Savings Account, to encourage saving for old age. The measures could be implemented immediately so savers should take action prior to the Budget.

Economic policy, Budget, Budgeting, Budgets

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Last call for the Tessa express

Article Abstract:

United Kingdom tax-exempt special savings accounts (Tessas) will be replaced by Individual Savings Accounts from April 1999, as will personal equity plans (Peps). ISAs will offer income tax and capital gains tax benefits but the allowances are less generous for ISAs than for Tessas. Tessas opened before April 5 1999 can be kept going for five years until they mature, and it is worth while investing in a Tessa if investors are able not to have access to the funds for a five year period.

Public Finance Activities, Tax Administration, Savings accounts

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