What was a PEP?

PEPs were introduced in 1987 and were available for new investment until 1999. Initially there were 2 types of PEP: General and Single Company PEPs. General PEPs were designed to hold a range of investments, including funds and shares. With Single Company PEPs you could just buy the shares of a single company.

These restrictions were relaxed in 2001. The new rules brought PEPs in-line with ISAs, giving investors the opportunity to invest freely throughout the world. The distinction between Single Company PEPs and General PEPs was also dropped.

On 6^th April 2008 PEPs were merged with Stocks and Shares ISAs. If you held a PEP it will have been converted to an ISA on 6^th April. This change will not affect your ISA allowance for the 2008/2009 tax year.

As a result of the merger of PEPs into ISAs there was a small change to the way interest is paid on cash held within PEPs. HM Revenue and Customs levy a 20% charge on interest gained from cash held within a Stocks and Shares ISA.

You can transfer the ISAs you currently hold between managers preserving the benefits. This means that whatever type of PEP you originally bought, you can now invest pretty much wherever you like - in funds, shares, even cash – and your investments remain sheltered from tax.

Download an ISA transfer form