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Personal Equity Plans

 

A. Personal Equity Plans

1. 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.

2. 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.

3. 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.

4. After 5 April 1999, no further subscriptions to PEPs could be made, but savers holding PEPs were able to continue holding them under the current rules. From April 2001, PEP regulations were brought in line with ISA regulations and there were 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 was paid on dividends from UK equities until 5 April 2004.

5. All PEP accounts automatically became stocks and shares ISAs on 6 April 2008 without individuals needing to complete any new forms, and became subject to ISA rules. The annual subscription limit will therefore be £7,200. Further information appears in the introduction to chapter 3 (Individual Savings Accounts).

B. Enquiries and Further Information

  • Enquiries about statistics on PEPs, TESSAs and ISAs should be addressed to Knowledge Analysis & Intelligence, Alistair Morton, HM Revenue & Customs 2/69, 100, Parliament Street. A telephone number for this enquiry is given in the 'Update calendar and enquiry points' page.