THE Bank of England has held interest rates at 0.5% for 14 months, compounding the pain of savers battered by inflation. But there is no reason to sit idly by while your capital wastes away.

Here, we show you ways to earn returns of 10% a year or more.

1 Offset mortgages People paying super tax of 50%, with savings and a mortgage, could net 10% returns if they switch to offset mortgages. David Black at Defaqto, the data firm, said: “The combination of flexibility, tax advantages and low interest rates means that anyone paying tax should give offset mortgages a second look.”

These deals work by offsetting your savings against mortgage debt, so interest accrues only on the balance. You pay tax on interest earned by your savings, but not on the interest saved by offsetting savings against your mortgage.

Someone taking out a £125,000 offset loan from Yorkshire building society at 3.09% fixed for a year (overall cost 5% including arrangement fee), and holding £40,000 in a linked savings account, would pay interest only on £85,000. This saves £60,775 in interest over the life of the mortgage and knocks six years, 11 months off the payment term.

To match this deal, savers in the 50% tax band would need to find a rate of at least 10%. Those paying 40% tax would have to find at least 8.3% and basic-rate taxpayers would have to earn 6.3%. Hannah-Mercedes Skenfield at Moneysupermarket, the price comparison firm, said: “Offset deals won’t necessarily be the right option for all borrowers. The savings depend on the proportion of the mortgage debt they hold in savings and the rate they pay on their mortgage. ”

2 National savings Index-linked savings certificates from National Savings & Investments, the government’s savings arm, have come back into vogue as inflation has surged.

NS&I certificates, which are tax-free and are available for terms of three and five years, pay a guaranteed one percentage point above the change in retail prices index (RPI) from one anniversary to the next, if held for the full term. The certificates are sold in issues, which allow savers to invest up to £15,000 in each.

Suppose you had put £15,000 in a three-year certificate in May 2009. Today, this would be worth £15,795, based on NS&I’s calculations. To get an equivalent return, a 50% taxpayer would have to find a savings account paying 10.6%, a 40% taxpayer would need one paying 8.8% and a basic-rate payer 6.6%.

Danny Cox at Hargreaves Lansdown, the adviser, said: “If investors tuck away £15,000 in each type of certificate each time NS&I issues new ones, a couple would squirrel away £60,000 free of tax and safe from inflation in one go.”

3 Income funds Equity income funds suffered due to their exposure to banks. Even though banks are traditionally big dividend payers, the crisis left many unable to make their yearly payout. One exception, however, was the Newton Higher Income fund, which increased its payout by 15% last year and expects to grow it this year, too. The fund is yielding just shy of 7% a year net.

Ben Yearsley at Hargreaves Lansdown said: “If you held this fund in an Isa, this would equate to a grossed-up return of 12.1% for a top-rate taxpayer, who would normally be hit by a dividend tax at 42.5%. A higher-rate taxpayer would get the equivalent of 10.4% as their dividend rate is normally 32.5%.”

4 VCTs You could also consider venture capital trusts, which invest in riskier, start-up firms. They offer income tax relief at 30% on up to £200,000, while VCT shares are free from capital gains tax on sale. You have to hold them for five years to benefit. Dividends are also tax free.

“Although they are only really a consideration for investors with a significant portfolio who can afford to take a long-term view, any VCTs yielding 6% or more will give a 50% taxpayer returns of at least 10%,” said Yearsley. The Maven Income and Growth VCT, for example, yields 7.5%, which is equivalent to a 13% return for a super-rate payer and 11.1% for one paying 40%.

5 Get a windmill Feed-in tariffs came into being last month, and were introduced by Labour to encourage householders to install solar panels or wind turbines, paying them a tax-free, index-linked income for the energy they produce.

The coalition agreement drawn up by the Conservatives and Liberal Democrats promised to honour “the full establishment of feed-in tariff systems in electricity”.

The tariffs pay up to 41.3p for every kWh of electricity produced using solar panels and an extra 3p per unit on top for any surplus electricity sold back to the grid. When you cannot generate enough energy for your needs, you buy electricity from your utility company at normal rates, but you will buy less, making significant savings on utility bills.

Ownergy, a company that advises consumers on renewable energy, suggests you can expect a return of about £950 a year for the average three- or four-bedroom house with solar panels, which typically cost £14,000 to install.

Given that the income is tax-free, the return on a £14,000 investment is equivalent to 12.9% for a 50% taxpayer and 10.3% for a 40% taxpayer, with the investment recouped in as little as seven years. As the payments are linked to RPI, this equates to a real return of 18.2% and 15.6% respectively at today’s RPI rate of 5.3%.