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Daniel Godfrey, director general at the AIC, said he was "absolutely delighted" to have made progress on the issue and that proposals could be implemented within the next two years.

Godfrey said the AIC had been looking at the issues surrounding the changes to the government’s taxation policy for a number of years.

"It's something that fits with government policy to improve consumer choice," he said.

"It's not expensive for them for lost tax revenue and could, over time, raise revenues for them. We hope we will confirm in the government’s mind that this is something worth continuing with."

Godfrey said he hoped changes to the tax regime would be outlined in the pre-Budget statement or in next year's Budget, with legislation brought in by 2010.

"There's been quite a lot of support from members who want flexibility to invest in bonds and from investors."

Godfrey added that changes to taxation would re-establish bonds as an alternative asset class for investment trusts, encouraging them to investment in company bonds, gilts and other assets without the corporation tax burdens.

Over the years, trusts have turned away from bonds and other assets in favour of more lucrative equities.

Unlike UK investment trusts – which operate under a more stringent tax regime – offshore trusts are able to receive interest from bonds and other assets.

For more on this read Monday's edition of Investment Adviser.