NEXT year will bring more financial challenges than most. The end of Peps and Tessas, the arrival of individual savings accounts and the impending birth of stakeholder pensions are just a few changes savers and investors must prepare for.
Interest rates are likely to keep falling in 1999, the stock market is expected to remain volatile and the economy may stall. So a financial action plan will be more important than ever.
This three-page special report explains how to take advantage of Peps and Tessas while there is still time.
It examines the steps taxpayers must take now to avoid falling foul of the taxman's controversial self-assessment regime and provides a range of other moneysaving tips.
For example, when the new year begins and the Christmas bills start to come in, it is worth taking a close look at mortgage and credit card arrangements.
An increasingly competitive financial marketplace means that switching lenders can bring an instant saving.
A financial spring-clean can seem tiresome. But on these pages writers Simon Read, Abigail Montrose and Ian James prove it can pay dividends.
Homeowner Steve Pyman, right, did just that when he took out a fixed-rate mortgage with Woolwich. Read on the next page how he increased his loan and cut his payments.
It is easy to follow his example.
ALMOST everyone can make more money in 1999 by paying less tax. It is simple and legal.
The New Year will signal a rush into many tax-efficient savings and investment plans as it will not be possible to take out new Peps or Tessas after April 5 when the new individual savings accounts (Isas) arrive.
Before then there are many ways to shield savings and investments from the taxman.
Most people with money in a bank or building society should think about starting a Tessa while they can.
These five-year savings accounts are like bank deposit accounts, except that the interest is tax-free if the capital is untouched for five years.
Most banks and building societies offer Tessas and rates of interest can be variable, fixed or linked to the performance of the stock market.
Anyone over 18 can open a Tessa. The minimum saving can be as low as [pounds sterling]10 a month and the maximum is [pounds sterling]9,000 over the five-year period. Of this maximum investment, no more than [pounds sterling]3,000 may be paid in during the first year, then up to [pounds sterling]1,800 a year in each of the following three years and [pounds sterling]600 in the fifth year.
Anyone taking out a Tessa before next April may continue to make annual payments up to the five-year maximum.
Higher Many savers avoid Tessas because they do not want to tie up their money. Yet the capital can be withdrawn at any time.
But tax must be paid at savers' highest rates on any interest earned and the account must be closed. However, small amounts of interest may be withdrawn without closing accounts.
Experts favour Tessas as they often pay better gross rates of interest than standard savings accounts, so higher interest may be earned even where accounts are not kept running to maturity. …