A hands on approach

self-select PEPs Total control over investment is an option, reports Claire Burston

INVESTORS who fancy picking their own shares can do just that in the tax-free environment of a self-select PEP. As with managed PEPs, the maximum that can be put into the self-select is £6,000 a year. The difference is that instead of leaving all investment decisions to fund managers, the self select PEPs are designed for do-it-yourself investors.

As such, they are generally considered to be for the experienced investor. But you can opt for a plan run by a stockbroker or independent financial adviser who will advise on shares, unit trusts and investment trusts for your PEP plan.

Stockbroker Killick & Co has been offering its Portfolio PEP for several years. Matthew Orr, a partner in the firm, said: "The problem is that because the name "self-select" implies a degree of execution, people don't realise they can actually get advice on which investments to buy within the PEP. It also implies wheeling and dealing in individual shares, but in fact nearly half of our business is investment-trust-related."

He believes self-select PEPs are more flexible than general PEPs. "We believe every investor should have a self-select PEP," he said. "The one great advantage is the ability one has to hold cash. You can hold the entire PEP in cash for as long as you like, as long as it is for the specific purpose of investing in shares in the future.

"If you feel uncomfortable about the price of any of the shares you are holding, you can sell them straight away and hold the PEP in cash until you are ready to invest in something else. You have total control."

He recommends clients invest at least £2,000 per holding in individual shares or investment trusts. Charges on a self-select PEP are usually a lot cheaper than the familiar managed PEP. Killick & Co charges 1.65 per cent in commission when you invest in a share or investment trust, and then charges £7.50 for handling each dividend.

The self-select PEP market is dominated by banks and stock broking firms but a few fund management companies also run them. Save & Prosper offers one called the Dealing Plan, for investors who either want to pick their own shares or who want to leave the decisions up to their financial advisers.

By investing through the Plan, dividends will be free of personal income tax and there will be no capital gains tax liability when shares are sold. Transactions are based on the amount you instruct the company to invest in a particular stock, so the number bought on your behalf will be dictated by the prevailing share price on purchase.

The minimum investment in the S&P plan is £l,000 for each shareholding. It comes under the category of a general PEP, so the maximum investment in a year is £6,000.

Before deciding on a self- select PEP plan, investors should consider how broad a spread of shares the company allows you to invest in and what charging levels they apply.

Also consider what happens in a rights issue when you hold shares, what happens to your voting rights and whether you can attend AGMs if you want to.

News
peopleHowards' Way actress, and former mistress of Jeffrey Archer, was 60
Sport
Romelu Lukaku puts pen to paper
sport
News
Robyn Lawley
people
Arts and Entertainment
Unhappy days: Resistance spy turned Nobel prize winner Samuel Beckett
books
PROMOTED VIDEO
News
people
Life and Style
Troy Baker and Ashley Johnson voice the show’s heroes
gamingOnce stilted and melodramatic, Hollywood is giving acting in video games a makeover
News
i100
Life and Style
Phones will be able to monitor your health, from blood pressure to heart rate, and even book a doctor’s appointment for you
techCould our smartphones soon be diagnosing diseases via Health Kit and Google Fit?
News
people
Extras
indybest
Travel
Ryan taming: the Celtic Tiger carrier has been trying to improve its image
travelRyanair has turned on the 'charm offensive' but can we learn to love the cut-price carrier again?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Sport
Usain Bolt confirms he will run in both the heats and the finals of the men's relay at the Commonwealth Games
commonwealth games
Life and Style
Slim pickings: Spanx premium denim collection
fashionBillionaire founder of Spanx launches range of jeans that offers 'thigh-trimming construction'
News
Sabina Altynbekova has said she wants to be famous for playing volleyball, not her looks
people
News
i100
Life and Style
tech'World's first man-made leaves' could use photosynthesis to help astronauts breathe
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.

iJobs Job Widget
iJobs Money & Business

Senior Investment Accounting Change Manager

£600 - £700 per day + competitive: Orgtel: Senior Investment Accounting Change...

BA/PM,EMIR/Dodd-Frank,London,£450-650P/D

£450 - £650 per day + competitive: Orgtel: My client, a leading bank, is curre...

Senior Analyst - ALM Data - Banking - Halifax

£350 - £400 per day + competitive: Orgtel: Senior Analyst, ALM Data, Halifax, ...

Java developer - Banking - London - Up to £600/day

£500 - £600 per day: Orgtel: Java developer - Banking - London - Up to £600/d...

Day In a Page

Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

The day America’s love of backyard tigers led to a horrific bloodbath

With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable
Samuel Beckett's biographer reveals secrets of the writer's time as a French Resistance spy

How Samuel Beckett became a French Resistance spy

As this year's Samuel Beckett festival opens in Enniskillen, James Knowlson, recalls how the Irish writer risked his life for liberty and narrowly escaped capture by the Gestapo
We will remember them: relatives still honour those who fought in the Great War

We will remember them

Relatives still honour those who fought in the Great War
Star Wars Episode VII is being shot on film - and now Kodak is launching a last-ditch bid to keep celluloid alive

Kodak's last-ditch bid to keep celluloid alive

Director J J Abrams and a few digital refuseniks shoot movies on film. Simon Usborne wonders what the fuss is about
Once stilted and melodramatic, Hollywood is giving acting in video games a makeover

Acting in video games gets a makeover

David Crookes meets two of the genre's most popular voices
Could our smartphones soon be diagnosing diseases via Health Kit and Google Fit?

Could smartphones soon be diagnosing diseases?

Health Kit and Google Fit have been described as "the beginning of a health revolution"
Ryanair has turned on the 'charm offensive' but can we learn to love the cut-price carrier again?

Can we learn to love Ryanair again?

Four recent travellers give their verdicts on the carrier's improved customer service
Billionaire founder of Spanx launches range of jeans that offers

Spanx launches range of jeans

The jeans come in two styles, multiple cuts and three washes and will go on sale in the UK in October
10 best over-ear headphones

Aural pleasure: 10 best over-ear headphones

Listen to your favourite tracks with this selection, offering everything from lambskin earmuffs to stainless steel
Commonwealth Games 2014: David Millar ready to serve up gold for his beloved Scotland in the end

Commonwealth Games

David Millar ready to serve up gold for his beloved Scotland in the end
UCI Mountain Bike World Cup 2014: Downhill all the way to the top for the Atherton siblings

UCI Mountain Bike World Cup

Downhill all the way to the top for the Atherton siblings
Save the tiger: The animals bred for bones on China’s tiger farms

The animals bred for bones on China’s tiger farms

The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

A former custard factory, a Midlands bog and a Leeds cemetery

Introducing the top 50 hidden spots in Britain
Ebola epidemic: Plagued by fear

Ebola epidemic: Plagued by fear

How a disease that has claimed fewer than 2,000 victims in its history has earned a place in the darkest corner of the public's imagination
Chris Pratt: From 'Parks and Recreation' to 'Guardians of the Galaxy'

From 'Parks and Recreation' to 'Guardians of the Galaxy'

He was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star