Investing for income: PEPs: the last chance

You will have to move fast - but help is literally at hand

THERE ARE barely two months left before personal equity plans, or PEPs, are phased out.

After 12 years of being a mainstay of anyone seeking to shelter investments from tax, they are to be replaced on April 6 by Individual Savings Accounts, another tax-free wrapper but with slightly different rules (it will still be possible to hold a PEP, of course, but they will no longer be on sale).

So this is the last chance to take advantage of a scheme offering significant benefits to anyone happy to put their money away for five years or longer.

Before April, it is possible to shelter up to pounds 9,000 in a PEP (pounds 6,000 in a general PEP and pounds 3,000 in a single-company version). Couples can put away double that amount.

There is no shortage of funds prepared to accept this money. Most are expecting floods of cash in the next few weeks. The big question for any investor, of course, is which fund to choose. Get it right and your last PEP can deliver thousands of pounds of tax-free growth in the next decade. Get it wrong and you won't have to worry about capital gains liabilities - because your fund won't have earned enough to be subject to them.

This is why The Independent has produced a "Guide to Last-Minute PEPs", written by Nic Cicutti, the paper's personal finance editor. It discusses whether PEP investments might suit your needs and what the tax benefits are - and aren't - as well as answering the most common questions about PEPs: how and where to buy them, what to look out for and what to bear in mind when buying one.

If you are considering a last-minute PEP, this guide, sponsored by Scottish Widows Fund Management, is for you. Call 0345 5678910 for your free copy.