Tax-Free Saving: Yes, there is life after PEPs and Tessas

While the new ISA is making all the news, there are other ways to avoid the taxman. Here and on pages 16 to 19 we look at the options
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WITH the end of the tax year on 5 April in sight, investors have just a few weeks left to make sure that they have arranged their 1997/98 affairs to take advantage of the tax breaks that are available.

We already know that in April 1999 individual savings accounts (ISAs) will come into force. In his Budget statement on 17 March Gordon Brown, the Chancellor, is expected to confirm the broad outlines of the ISAs. Some of the finer details of the scheme may emerge later.

We should, however, hear from him whether the Government has listened to all the criticisms that have come from private investors and the financial service sector of the intended pounds 50,000 lifetime cap on the amount that can be sheltered from tax in an ISA. Maybe he will raise the limit; maybe he will ring- fence existing schemes such as personal equity plans (PEPs) so that any money invested in them can remain, attracting the tax advantages, but no new money can be added. Maybe he has an obstinate streak and will ignore the public and industry outcry and make no changes to the proposals.

What is certain is that PEPs and tax-exempt special savings accounts (Tessas) will not be open to new investment after 6 April 1999. So anyone who wants to invest in them has until the end of this tax year to make use of his or her current allowance. After this, you will have just one year left to take advantage of them.

But PEPs and Tessas are not the only tax-efficient means of saving. If you are planning your retirement fund, looking for a tax free income or wanting to build up capital, there are a number of ways you can do so and save on tax at the same time. This can be done through regular savings, by means of a lump- sum investment, or both. This survey is your guide though some of these tax-efficient investments.