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Late Isa surge but sales halve over the year

The end of the tax year saw a last-minute surge in Isa business but IMA figures reveal that net Isa business nearly halved over the year to April compared with the previous year.

March saw net Isa sales of 445m compared with 496m but the period April 1-5 saw net sales of 327m compared with 247m for the same five days last year. The figures taken together represent a 4 per cent rise of 29m on last year’s Isa season.

But net Isa sales fell by 47 per cent to 1.7bn in the 12 months to April from 3.6bn.

The IMA says investors waited to see if Chancellor Gordon Brown maintained Isa limits in his March Budget, with the UK equity income sector selling most strongly, with inflows of 231m.

The sector with the biggest outflows in March was the active managed sector, with net outflows of 41m.

Lowes managing director Ian Lowes says the figures show a lack of investor app- etite despite improving markets. While there has been an Isa season of sorts, he says he is disappointed by the year’s results.

He says: “The figures for the year are dire. Isas have faced competition from VCTs and structured products and they have been hit by popular misconceptions about their tax efficiency. I think it is a crime not to use the Isa allowance but it seems that Isas are not as popular as they once were.”

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