But another reason was the initial rule that for trusts to qualify fully for PEPs, at least 75 per cent of the holdings had to be UK shares. This excluded many investment trusts that invest internationally - the very ones seen as most suitable for private investors because their wide spread of holdings helped to reduce the investment risk.
Since then, the rule has been relaxed: now it stipulates at least 50 per cent of holdings must be in European Union shares or bonds, which has brought more investment trusts on board. A further boost came in 1992, when the investment limit for qualifying trusts was raised to the full pounds 6,000 a year, whereas up to pounds 1,500 could be put into non-qualifying trusts - those that did not meet the 50 per cent rule.
Unlike unit trusts, investment trusts are companies in a legal sense, and the Association of Investment Trust Companies has been campaigning for them to be eligible for single-company PEPs, just like any other listed company. Individuals may invest up to pounds 3,000 in a single company PEP each year. At present, however, investment trusts can be included only in general PEPs.