The latest escape route, dreamt up by Swiss private banks, uses a type of Luxembourg-based investment firm called a Sicav (société d’investissement à capital variable). The schemes are not subject to the EU savings-tax directive, which ordered member states to share information about people who live in one country but earn savings income in another, in a bid to combat tax fraud.

However, three countries — Austria, Belgium and Luxembourg — are doing things differently for a transitional period. Rather than share information with other EU members, they will levy a so-called withholding tax — initially 15% — if the saver lives in a different country. Most of the tax will then be paid to the person’s country of residence, although you may have to pay additional tax up to your highest rate.

Switzerland and traditional British offshore centres such as Jersey, Guernsey and the Isle of Man have adopted similar measures.

Savers can avoid the withholding tax if they can prove that they are not subject to tax, or if they authorise their bank to share information.

Some unit trusts that invest in cash or bonds are caught, as are open-ended investment companies (Oeics). These are similar in structure to unit trusts, but are more flexible.

The Luxembourg-based version of an Oeic, the Sicav, may not be subject to the savings directive, however.

UBS, the Swiss bank, has recently launched a range of Sicav funds investing in bonds, while Credit Suisse offers similar products. The schemes are being offered primarily to institutions and private banks.

However, while Sicavs escape the savings directive, they do not avoid tax entirely. UK residents must still declare their income to Revenue & Customs every year and pay any tax due.

A better option might be an insurance bond. They are exempt from the savings directive and you can also draw an income of up to 5% and defer any UK tax until you cash in the investment.