Tax Planning: These could be your last days of freedom

Make the most of the tax-efficient ways of investing and saving before the Budget. Here and on pages 8 to 12, we show you how

You may still be reeling from paying a giant tax bill last month. But you have very little time to get your act together to make the most of tax breaks before the end of the current financial year on 5 April. And you may not even have that long; the Budget on 9 March could put a stop to some of the commonly used tax planning tactics. Last year the Chancellor withdrew "bed and breakfasting" - selling and buying back shares to use up capital gains tax allowances.

Many experts think the inheritance tax rules are most likely to be changed and potentially exempt transfers (PETs) could be axed. At the moment no tax is charged on gifts if the donor lives for seven years afterwards (see page 8 for more on tax rules and allowances).

Our investment survey this week takes an end-of-year overview of the most popular tax-efficient ways to save and invest. Tax is a boring subject, but if you are a taxpayer you need to be aware of easy ways to pay less. And this is the time to sort out your finances. You can still make last-minute PEP and Tessa investments, while with- profits bonds have also been winning thousands of new customers who are worried about taking a chance on the stock markets (see page 9 for more on with-profits bonds).

If you have existing PEP investments or building society savings accounts you have probably received a letter about the introduction of ISAs, the new tax-free individual savings accounts. If you want to carry on with a regular savings PEP after 6 April then your PEP manager will want you to sign up now for a "maxi ISA". This means your payments will continue to be debited in the same way (see page 12 for more on PEPs and ISAs).

But if you sign for a maxi ISA with the fund manager running your PEP then you are unlikely to get the chance to save any money in a tax-free ISA savings account. This will not be stated on the literature.

You should sign up now if you plan to use up your entire ISA allowance on replicating your PEP investments with the same manager in ISA holdings of shares or corporate bonds. If you don't want to stick your full pounds 7,000 ISA allowance (for 1999/2000) into shares then you may do better not to sign up. Some fund managers are offering a maxi ISA including both stocks and shares and a cash fund, so you can have a tax-free savings account as well as stock market investments.

Most of the companies with cash and share maxi ISAs are life insurers. These firms often have a poor track record in managing stock market funds but there are some solid performers to choose from, such as Standard Life and Legal & General. Specialist fund managers offering cash and shares include Save & Prosper, Virgin Direct, Morgan Grenfell, Jupiter and M&G.

n Jupiter, 0171-412 0703; Legal & General, 0500 116622; M&G, 01245 390390; Morgan Grenfell, 0171-545 7171; Save & Prosper, 0800 829100; Standard Life, 0800 333353; Virgin Direct, 0345 900900.

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