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Personal Equity Plan

Personal Equity Plan Definition

In the United Kingdom a Personal Equity Plan is a form of tax-free savings account. They were instituted in 1987 by the Thatcher government to increase the incentive to save. Investment into PEPs have since been frozen and the government is encouraging the use of the replacement Individual Savings Accounts, but many remain active.

The annual allowance into a PEP was £6,000 into a General PEP which had to be a collectively managed fund (see mutual fund) that qualified. Qualification was previously defined as an investment that invested at least half of its assets in the UK and was later extended to the European Union. The qualification rule for existing PEPs has since been removed. Further to this £3,000 could be invested in a Single Company PEP which was classified as shares in a single company. Additionally Windfall shares received by members from mutual bodies when they became listed companies could also register the holdings as a PEP.

Tax-Exempt Special Savings Account

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