Personal Equity Plans
A. Personal Equity Plans
- Personal equity
plans (PEPs)
commenced on
1 January 1987
but were closed
to new subscriptions
from 6 April
1999. They were
available to
anyone aged
18 or over and
resident and
ordinarily resident
in the United
Kingdom (UK)
for tax purposes.
Investors are
exempt from
income tax on
dividends and
interest, and
from capital
gains tax arising
on shares, bonds
and units held
in a plan. Originally,
only shares
in UK companies
were eligible
for direct investment
via a PEP. Other
European Community
shares were
included from
1 January 1992,
and a range
of corporate
bonds, preference
shares and convertibles
from July 1995.
Indirect investment
via a unit or
investment trust
or, from August
1997, via an
open ended investment
company, was
also permitted.
The administration
of the scheme
is carried out
by approved
plan managers.
- In 1987, the
annual limit
for investment
in shares was
£2,400. It was
increased each
year to £6,000
in 1990-91 and
subsequent years
of the scheme.
Initially only
a proportion
of the limit
could be invested
in unit or investment
trusts. This
restriction
was removed
in 1992-93.
- From 1 January
1992, investors
were allowed
to subscribe
in any year
to a single
company PEP
(SCP) investing
in the shares
of just one
company as well
as to a general
PEP investing
in one or more
companies. The
limit on investment
in a SCP was
£3,000. Also
from January
1992, shares
acquired under
approved profit-sharing
schemes and
savings-related
share option
schemes (see
the 'Employee
share schemes'
and 'Profit
related pay'
sections) could
be transferred
directly into
a SCP up to
the £3,000 limit
free of capital
gains tax.
- No subscriptions to PEPs may be made after 5 April 1999, but savers holding PEPs will be able to continue holding them under the current rules. From April 2001, PEP regulations were brought in line with ISA regulations and there is no distinction between the general and single plans. Additionally, in line with the rules for the new individual savings account, a 10 per cent tax credit will be paid on dividends from UK equities until 5 April 2004.
B. Enquiries and Further Information
- Enquiries about statistics on PEPs, TESSAs and ISAs should be addressed to Yee Wan Yau, Analysis & Research, Inland Revenue, West Wing, Somerset House, Strand, London WC2R 1LB. A telephone enquiry number for this section is given in the 'Update calendar and enquiry points' page.
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