Personal Equity Plans: Should you join the singles club?

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The Independent Online
IT'S EASY to overlook single-company PEPs, but ignoring them means losing out on sheltering a further pounds 3,000 from tax demands, writes Simon Read.

Single-company PEPs are ideal for anyone who has shares in just one company. You might favour a blue-chip such as Marks & Spencer, or be part of an employee share scheme, or have windfall shares that you haven't put into a PEP.

Be wary: investing in one share means running the risk of seeing the price drop like a stone. But if it performs well, a single-company PEP won't be held back by other investments.

The problem is finding the right share. You have three options. If you know which company you want to invest in, a corporate PEP administered by that company is your best option.

If you know which company you favour but want the option of switching to another company later, choose a self-select PEP. If you would rather pay a fund manager to pick the stock, choose a managed PEP.

More than 200 companies offer corporate PEPs in their own shares. Halifax launched one last year when it issued shares. They are cheap to run, so costs are low. Some companies will pay the cost of any PEP brochure and cover the PEP manager's initial fee. Bradford & Bingley, Halifax Investment Services, NatWest and the Royal Bank of Scotland are big players. Annual charges start at around 0.25 per cent.

If you want to self select, you need a PEP manager with low charges. Here you make the investment decisions and the manager just administers your PEP. Before signing up, check whether there are any restrictions on the type of shares that can be held. Self select is the most expensive: expect annual charges of around 1.5 per cent.

If you want to leave decisions to the professionals, pick a managed PEP. Several companies will manage a single-company PEP on your behalf, but they charge around 1 per cent a year.

q PEP Talk can supply a list of companies which offer corporate PEPs: call 0800 339999. The Chase De Vere PEP Guide, at pounds 12.95, covers all types of available PEPs: call 0800 985 9000.