Keep an eye on PEP deadlines: Two-week difference may catch the unwary, report Caroline Merrell and Vivien Goldsmith

INVESTORS racing to invest the full amount into a personal equity plan before the end of the tax year will find that fund managers are operating under two different deadlines.

Some will accept uncleared cheques right up until 5 April, while others will not accept cheques after 23 March - a difference of nearly two weeks.

The deadlines depend on whether the fund manager operates a seven-day cooling-off period. This means that if investors change their minds, they can get all their money back, as cash is not actually invested during the seven days. Fund managers operating this system will typically accept cheques up until 29 March. If the cheque has to clear, the deadline could be several days earlier.

Other plan managers operate under a 'cancellation' system. They will accept money for investment right up until 5 April. The money is invested straight away, and if investors subsequently change their minds, they will get the market value of their investment back. If the market has fallen, they will lose money.

Bradford & Bingley Building Society will accept cheques no later than 23 March. The society operates under the cooling-off system and will not accept uncleared cheques into its PEP.

Mike Hildred, Bradford & Bingley marketing support manager, said: 'We do it in the best interests of our members. Being a building society, people wouldn't understand if they wanted to cancel their PEP and they had lost money.'

Save & Prosper also works under the cooling-off system and accepts cheques no later than 29 March.

Mike Ryder-Richardson, marketing manager, said: 'The majority of our PEP sales go into a managed portfolio of shares. If we operated under cancellation it would be difficult to unscramble the deal.'

Investors who already have a PEP with Save & Prosper will be able to invest up until 5 April.

Barclays, John Govett and Mercury are among fund managers that operate a deadline of 28 March, while those with a 5 April deadline include Perpetual, Fidelity and M&G.

Halifax Building Society operates under the cancellation system, but will accept cheques no later than 31 March.

Some financial advisers will cut the cost of PEPs by giving away some of the commission paid to them by the management companies for selling the units trusts.

Advisers normally receive 3 per cent of the sale as their commission, and nothing thereafter. But PEP managers are now paying 0.25 to 0.5 per cent a year as a renewal commission.

Sam Simmonds, portfolio manager at Chelsea Financial Services in London, said: 'We normally take just 1 per cent at the outset, ie, a 2 per cent discount, and sometimes we can negotiate bigger discounts because of the volume of business that we are doing. We were doing that before renewal commission was introduced.'

The PEP Shop in Nottingham will rebate the full 3 per cent initial commission, even on the new M&G Managed Income PEP, which has no initial charge (it does have diminishing exit charges).

Hargreaves Lansdown of Bristol is not a discount broker, but it does give selective discounts.

Peter Hargreaves said: 'We give an enormous service to our clients. It is a totally different operation from a discount broker concentrating on sales.'

Baronworth Investment Services in Gants Hill, Ilford, Essex normally offers a 2 per cent discount.