Personal Finance: Warming to VAT ploy

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The opportunity to buy VAT-free gas, electricity and coal ends officially on Friday, but as that is Good Friday, anyone going to the brink will have to visit a showroom early in the week or risk missing the moment.

The 8 per cent tax clearly beats any returns you can get from the building society in the short term. But even paying enough to cover bills for two years - assuming interest rates do not rise - will leave you better off.

Tales of people paying thousands of pounds are, I suspect, apocryphal but it really does not make sense to pay 10 years' bills in advance. Apart from uncertainty over interest rates and whether you might want to move home, the advantage dims the longer the fuel company has your savings rather than you.

But beating the system for a few months or a few years gives you a warm glow all by itself.

The 1 April VAT deadline is quickly followed by the routine end of the tax year deadline on 5 April.

This has significance for pensions, personal equity plans, capital gains tax and gifts. It is almost too late for most of the quick steps to make sure you keep the maximum and the Government gets the minimum.

But you can still get money into a 1993/4 Pep. Many of the unit trust groups, such as GT, Perpetual and M&G will be taking cash right up to 5 April.

You can still 'bed and breakfast' shares to take advantage of this tax year's pounds 5,800 capital gains tax allowance after taking inflation into account. This establishes a new buying price to mitigate any future CGT liability.

Anyone who wants to opt back into the state top-up pensions scheme, known as Serps, the State Earnings Related Pension Scheme, has until 5 April to get Form APP2 back to the Department of Social Security, which is a tight squeeze. But you are probably too late to start thinking about a personal pension.

I know it is not entirely sensible to leave things to the last minute. There is a good argument that it is sensible to rush and take out a 1994/5 Pep on 6 April to get it working for you as long as possible, rather than waiting another year if you have missed this year's deadline or have enough cash to do both.

But people will only be galvanised into action by a deadline. So it is lucky that the financial calendar gives out such strong signals to the sluggards that now is the time for action.

A VAST credibility gap is opening up over pensions.

It always did take a great leap of faith to translate giving up some take-home pay today into a better standard of living in old age.

But wave upon wave of shock-horror stories about personal pensions and the fact that no one can be forced into joining a company scheme any more means that many may decide not to play the pensions game.

In the end they are bound to be the losers. The idea of relying on the state to take care of things really does beggar belief.

There are undoubtedly armies of self-seeking insurance salesmen who have been selling personal pensions to anyone who could bear to listen to their fear-and-greed sales patter.

Many will have made the right decision and trusted their future to the markets rather than awaiting a pay-related promise from the state top-up system, Serps, or a company scheme.

But many will have been dragged in against their better interests. We have all heard about those with comforting civil service or NHS pensions who have taken a wrong turn and traded in an index-linked pension for a leap in the dark.

Inflation may only be 2.5 per cent now, but the risk that it could bound out of sight again is ever-present and protection against that is worth a lot of sound sleep as old age approaches.