Tony Blair’s Disappearing PEPs
MEDICORACY writes to Mr Boris Johnson on Peps and Isas:
Conversion of PEPs to ISAs
As you may know, on 6 April 2008 Personal Equity Plans (PEPs) are being converted to ISAs.
At some point, not long after ISAs were introduced (or proposed), the Labour government gave assurances that the tax status of PEPs was guaranteed in perpetuity (the word quoted in the papers, and attributed to Tony Blair, was ‘ringfenced’), i.e. that they would not be interfered with. This meant that the money originally invested, together with any capital gains made, could continue to be invested within the PEP with the same tax exemptions, although money withdrawn from the PEP could not be paid back into it.
ISAs, on the other hand, have always been explicitly described as having a finite life span. There is currently no definite termination date for them, but there is a clear understanding that their tax advantages may be removed at some future point.
By turning PEPs into ISAs, the former guarantee (that the tax exemptions of existing PEPs would continue indefinitely into the future) is effectively eliminated. The government will be free to withdraw at some future stage the tax privileges from funds that have been built up within PEPs, but which will now be in ISAs.
I believe this is an unacceptable ‘back door’ way of reneging on a former commitment.
I would be interested in your comments on this matter.
Kind regards, etc.
If he gets reply, he’ll let us know…
Posted: 6th, February 2008 | In: Reviews Comment | TrackBack | Permalink
