And with a PEP, you are not obliged to spend the returns on school fees.An alternative that is closer in risk terms to an educational trust plan, is zero dividend preference shares. However, most people would need advice with these, or to go back to investment school. As a result, at least 15,000 families face an increase in the cost of putting children through private education. The Charity Commission said it had decided to withdraw the tax-favourable status from these trusts - which include those associated with the School Fees Insurance Agency (a specialist financial adviser) and insurer Sun Life - because they gave insufficient public benefit to justify the perks. By investing money through these trusts, families have been able to get tax-free returns.

Without the charitable status, the profits become taxable, leaving less money to pay fees. The Revenue's move followed a decision by the Charity Commission to withdraw charitable status from severaleducational trusts. WHAT IS the Inland Revenue up to? (Apart from collecting taxes, of course.) News emerged this week that a tax wheeze used by parents and grandparents to help pay school fees is to be clamped down on And this under a Conservative government. Strange, too, that the story should appear the week of the two main teaching unions' annual conferences. Fixed-rate deals are based more on interest rates on investments such as government gilts, rather than the base rate or mortgage rate, so it is quite possible for fixed-rates to be rising while other savings rates fall.

Savers looking for income with a lump sum of pounds 20,000 they can tie up for seven years can get a fixed-rate as high as 7.14 per cent net of basic rate tax (equivalent to 8.93 per cent pa gross) from a bond on offer from Financial Assurance, according to financial adviser Baronworth Investment Services (0181-518 1218).Society Windfall When due Interest on pounds 2,500 (average) instant access (% gross)*Halifax pounds 900 shares summer 1997 2.70Woolwich pounds 800 shares autumn 1997 2.35Alliance & pounds 800 shares spring 1997 2.75 LeicesterNational & pounds 500-plus Sep 1996 2.80 Provincial shares/cashNorthern Rock pounds 1,000 shares autumn 1997 0.65Bristol & West pounds 600 cash? 1997? 1.65Nationwide None n/a 3.10 announcedBradford & None n/a 2.10 (1) Bingley announced* Source of interest rates: Moneyfacts(1) 0.75% bonus if three or fewer withdrawals pa. Other converting societies have declined to say whether savers will reduce their entitlement by touching their savings.Societies flying the mutual flag have maintained that savers (and borrowers) will be worse off with the would-be banks. And a move by the Alliance & Leicester to introduce charges from next month on accounts with balances of less than pounds 1,000 where savers make more than two withdrawals a month could be seen as a worrying development.But even the traditional societies are cutting savings rates. Both Nationwide and Yorkshire building societies last week announced they would cut their mortgage rates by 0.25 per cent to 6.74 per cent from May 1 - a new low - in an attempt to establish a new building society mortgage rate norm below that of the would-be banks. The Nationwide said that while it would continue with its recently espoused policy of keeping its difference between saving and borrowing narrower than converting societies, it would still be matching the mortgage rate cut with 0.25 per cent for savers; and the Yorkshire said it expected to do the same.