Trusts open up National Savings

IF YOU are tempted by the products on offer from National Savings, there is a perfectly legal way to ignore the investment limits and in effect invest as much as you like, writes Sue Fieldman.

You hold the investment in trust.

The word trust conjures up visions of complications, solicitors and trust deeds - none of which is a pleasant thought. In fact, with NS savings certificates, the most popular products held in trust, it is just a matter of ticking a box.

The investment limit for 40th-issue savings certificates is pounds 10,000. They pay 5.75 per cent tax-free.

If Mr Smith already has pounds 10,000 invested, he can put in another pounds 10,000 in trust for Mrs Smith. She can do the same for him so that they could have a total holding of pounds 40,000. There are numerous permutations, and if you have children you can also hold in trust for them.

The investment limit for the current index-linked certificates is pounds 10,000. The rate of interest is 3.25 per cent plus index-linking.

If you reckon this is an attractive proposition, you can adopt the trust route all over again.

The reason you can invest so much through trust holdings is that certificates held as trustee do not count towards your own holding.

You must remember, therefore, when completing the application form to hold in trust, not to put in the NS holder's number you were allocated when you bought previous certificates for yourself.