Brian Tora column

Do not expect ISAs to have anything like the impact that PEPs have had

SO, FAREWELL then PEPs. It has been nice knowing you. From next Tuesday you are history. But you have made quite an impression in the 12 years you have been here.

The first PEPs, launched in 1987, allowed only pounds 2,400 to be invested in the stockmarket - and you could not buy unit or investment trusts. The allowance has been increased, with the result that this year you could have invested pounds 9,000, split between pounds 6,000 in a general PEP and pounds 3,000 in a single company PEP. If you had religiously used up each year's allowance, you would have quite a sizeable investment pile.

It is rumoured that there are a few PEP millionaires around, although I have yet to meet one. Certainly half-millionaires, if you take husbands and wives together into account, are not rare, given the way the market has advanced over the past decade. No wonder Labour decided to close the door.

Money has certainly been flowing into PEPs as people take advantage of this last opportunity. The marketing hype has been huge. This money has to be invested and, sure enough, shares are close to all-time highs. But then, so is Wall Street. In fact it is surprising that our market has not performed better, given the support.

To some extent we should not be surprised. While there are new investors attracted into the system through PEPs, much of the money that has been flowing in has simply been reallocated from other investment sources. PEPs were always most attractive to established investors. Firms like ours have been raising money from taxable portfolios to put into PEPs ever since they were introduced. They may have attracted tens of billions of pounds, but a lot was invested already.

The allowances for the ISA are less generous, but investment restrictions are not as great. This means that people putting money into this new vehicle could choose to invest it all outside the UK. And although you can put all of your ISA into the stockmarket, there is no obligation to do so - with mini-cash and life insurance ISAs available also. So do not expect ISAs to have anything like the impact that PEPs have had.

I am not convinced that PEPs have made that much of a difference to the market anyway, but we could soon be suffering from morning-after effects as we move into the new tax year. It may take a while for the dust to settle, but it would not surprise me if people took a more critical view of their investments once they know they have a full year to mitigate any tax complications that selling in April brings. We have become used to rising stock markets, PEP-fuelled or not PEP-fuelled. I have a feeling that we should expect rather more mundane conditions as we near the new millennium.

Incidentally, if you have not yet taken out your final PEP, there are a number of providers staying open all over the Easter break, just so they can relieve you of your money. I am told that at least one major investment house is prepared to take PEP applications as late as one minute to midnight on Easter Monday. That shows you how keen they are to make the most of this selling opportunity.

Brian Tora is head of Greig Middleton Asset Management

Voices
voices
News
general electionThis quiz matches undecided voters with the best party for them
Arts and Entertainment
Keira Knightley and Matthew Macfadyen starred in the big screen adaptation of Austen's novel in 2005
tvStar says studios are forcing actors to get buff for period roles
News
Prince William and his wife Catherine, Duchess of Cambridge show their newly-born daughter, their second child, to the media outside the Lindo Wing at St Mary's Hospital in central London, on 2 May 2015.
news
Have you tried new the Independent Digital Edition apps?
Life and Style
ebookNow available in paperback
ebooks
ebookPart of The Independent’s new eBook series The Great Composers
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs General

    Ashdown Group: Trainee Consultant - Surrey/ South West London

    £22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

    Ashdown Group: Trainee Consultant - Surrey / South West London

    £22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

    Ashdown Group: Recruitment Consultant / Account Manager - Surrey / SW London

    £40000 per annum + realistic targets: Ashdown Group: A thriving recruitment co...

    Ashdown Group: Part-time Payroll Officer - Yorkshire - Professional Services

    £25000 per annum: Ashdown Group: A successful professional services firm is lo...

    Day In a Page

    Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

    Fishing is on Nigel Farage's mind

    Ukip leader casts a line to the disaffected
    Who is bombing whom in the Middle East? It's amazing they don't all hit each other

    Who is bombing whom in the Middle East?

    Robert Fisk untangles the countries and factions
    China's influence on fashion: At the top of the game both creatively and commercially

    China's influence on fashion

    At the top of the game both creatively and commercially
    Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

    The man known as GOD has a reputation for getting the job done

    Lord O'Donnell's three principles of rule
    Rainbow shades: It's all bright on the night

    Rainbow shades

    It's all bright on the night
    'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

    Bread from heaven

    Dutch survivors thank RAF for World War II drop that saved millions
    Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

    How 'the Axe' helped Labour

    UK will be 'run for the wealthy and powerful' if Tories retain power
    Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

    The price to be paid for challenging the rule of extremists

    A revolution now 'consuming its own children'
    Welcome to the world of Megagames

    Welcome to the world of Megagames

    300 players take part in Watch the Skies! board game in London
    'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

    Charlotte Gainsbourg on 'Nymphomaniac'

    Starring in one of the most explicit films ever
    Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

    Robert Fisk in Abu Dhabi

    The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
    Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

    Vince Cable exclusive interview

    Charging fees for employment tribunals was 'a very bad move'
    Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

    Iwan Rheon is returning to his Welsh roots

    Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
    Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

    It's time for my close-up

    Meet the man who films great whites for a living
    Increasing numbers of homeless people in America keep their mobile phones on the streets

    Homeless people keep mobile phones

    A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before