Getting together to win a million: Vivien Goldsmith on forging new bonds

NOW the top prize on Premium Bonds has been raised to pounds 1m each month, more workplace groups are expected to get together to try their luck.

But they must proceed with caution because bonds have to be held in an individual name. An agreement would need to be made in writing stating that the bonds were held in trust for the group.

Gillian Cockburn, a solicitor of Guilford, Surrey, said: 'The terms of the agreement would have to cover whether members become eligible to share in any prizes immediately they join, or whether they must wait for a set period. The agreement should also cover how long members must wait before their investment in the syndicate is repaid.'

Rather than having all the bonds bought in the name of one person who holds them for the syndicate, bonds can be bought in individual names with an agreement to share prizes.

This was the arrangement at Hill & Perks in Norwich, now part of the Eversheds group of solicitors. The plan operated like a savings scheme with a set amount deducted from members' salaries each month. It started at pounds 1 and rose to pounds 10 a month. (The minimum purchase of bonds is now pounds 100.)

Richard Jacobs, a member, said the chief cashier bought bonds in individual names registered at the office address. All prizes - and there were only small ones - were shared among the scheme members in the ratio of the number of bonds they held. 'It was pretty difficult when we won tiny prizes,'said Mr Jacobs.

When people left the firm they re-registered the certificates at their own address and took them away with them.

After the firm merged with another, too many wanted to join the bond syndicate and rather than make it a closed shop it was disbanded.

John Snelgrove, of the accountants BDO Binder Hamlyn, says the Inland Revenue has made it clear that Premium Bond syndicates, like pools syndicates, will not be caught in the inheritance tax net. When winnings are paid out to syndicate members there is no gift as the winnings already 'belong' to the members.

Premium Bonds pay a notional interest of 5.2 per cent which is issued in prizes. Each month there is a pounds 1m prize, two of pounds 100,000, three of pounds 50,000, four of pounds 25,000 and 10 of pounds 10,000 as well as smaller prizes down to pounds 50. Each pounds 1 bond has a 15,000-1 chance of winning a prize each month. Statistically, a holding of pounds 1,250 'should' win a prize each year.