It is possible to transfer a PEP from one manager to another and retain its tax-free status But this must be done

It is possible to transfer a PEP from one manager to another and retain its tax-free status But this must be done by the new PEP manager. Husbands and wives can each have up to pounds 9,000 in a PEP.Income from a PEP is free of tax. If you miss the 5 April deadline, there will be no more PEPs. Up to pounds 1,500 can go into “non-qualifying” trusts which do not satisfy the 50 per cent rule, but this must be within the same PEP.You can only have one PEP manager a year, although your single company and general PEP manager can be different Annual PEP allowances cannot be carried over. It is also possible to choose your own shares, placing them in a “self-select” PEP available from stockbrokers.PEPs were first aimed at promoting investment into UK companies. It is still the case that you must have at least 50 per cent of your general PEP in UK- or EU-based companies. You do not have to declare a PEP to the Inland Revenue: the taxman will know about your investment anyway.Up to pounds 6,000 can be placed in a “general” PEP, which usually consists of so-called pooled funds such as unit and investment trusts, plus a further pounds 3,000 in a single company one.

What are the PEP rules governing what you can invest?
You must be over 18 and a UK resident. Although you do not need to pay tax to invest in a PEP, those who benefit most are higher-rate taxpayers. This means investing in a PEP or, from 6 April, in an Individual Savings Account (ISA). Apart from finding a manager with the skills to outperform his or her rivals, the next best way to add a few pounds to the value of a fund is to see the growth roll up free of tax. ANYONE INVESTING their hard-earned savings wants to maximise the growth they will receive. No matter where they start, be it with macro economics or looking at individual companies, the real difference is between those who make good investments and those who don’t..

“No fund group these days will ever admit to being just a pure stock picker,” says Bob Yerbury of Perpetual. “We all take into account the general economic background while we look for undervalued companies.At the end of the day, there is surprisingly little difference in the overall performance results of the top downers and the bottom uppers. If you want to invest in mobile phones, for example, you must look at Nokia. This is a Finnish company, yet Finland only has a tiny role on the world stage.” So an investment in a company like this would be larger than an investment in Finland would justify on a pure top down approach.Of course, most groups employ both approaches to some extent before making their eventual share selection. “With the changes we’ve seen in world markets over the past couple of years, we have moved to more stock selection, whichever county they happen to be in. From here it then selected sectors that would benefit from the then current trends before choosing which companies to invest in.”We’ve now taken a more balanced approach,” says Simon White.