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Julian Gibbs

With UK shares nearly 40 per cent off their record high, now is an excellent time to transfer underperforming Peps into the NDF protected UK growth plan, issued in conjunction with Abbey National Treasury Services. This is a tax-free investment offering 100 per cent of the rise in the FTSE 100 over five years, unlike most other plans which have capped growth.

It gives a full return of capital provided that the index does not fall by more than 50 per cent and fails to recover fully to its level on October 4, 2002.

Independent analyst FVC has given this product the highest rating of all products reviewed under its new scoring system. It gets nine out of 10 for higher-rate taxpayers and 8.75 out of 10 for basic-rate taxpayers. This compares very favourably with the average score of 6.3 on the 175 products already reviewed.

Couples can each use their Isa allowance to invest up to £14,000 free of tax. Furthermore, by using individual capital gains tax allowances of up to £7,700, substantial amounts can also be invested for children, even by parents, as each child has their own allowance and, unlike gifts producing income, there is no liability to tax on the parents.

The average maturity proceeds since the launch of FTSE 100 index would have been 160 per cent but, at current levels, the returns are likely to be higher than this. Since the FTSE 100 was launched, on no occasion would the 50 per cent safety zone have been breached – there would always have been a full repayment of capital, unlike the returns on tracker funds, when there have been some periods when investors have made heavy losses, such as at present.

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