Word on the Street

Advisers will need to contact all clients with Peps to ensure than any unused cash within the wrappe...

Advisers will need to contact all clients with Peps to ensure than any unused cash within the wrappers is re-invested before it is subjected to 20% tax. Unused cash in Peps is currently only taxed if the holder withdraws more than £180 in interest per tax year. In order to generate £180 worth of interest, at an interest rate of say 5% there would have to be at least some £3,600 in unused cash. Under Isa rules, unused cash is taxed at a flat rate of 20% whenever the interests is paid, which is twice a year in certain cases. As part of the pre-Budget report, the Chancellor has stated th...