Last-minute crawl to hit Isa deadline

Jane Padgham12 April 2012

THE traditional last-minute rush to meet the tax year-end deadline for Individual Savings Account (Isa) allowances looks set to fall well short of the frenzy seen in previous years.

Fund managers are reporting a sharp pick-up in business - as is usual in the days before 5 April - but sales are still well down on a year ago. The industry is bracing itself for the lowest sales of tax-free savings products for five years.

'We've seen a significant increase in sales, but from the low levels of recent months,' said Clare Arber at the Investment Management Association, the Isa industry body. 'There's still a lack of confidence in the market. People haven't quite recovered from the shock of getting their Isa statements and seeing the numbers going down instead of up. Most investors are not withdrawing from the market - they are just sitting on their hands until confidence returns.'

The stroke of midnight on Friday will draw to a close a dreadful year for Isa sales which saw investors shunning equity-based investment products because of the stock market slump. Figures from the IMA this week showed net sales in February were 51% lower than in the same month a year ago.

Stephen Glynn, joint managing director at Jupiter Unit Trusts, reckons that Isa sales are currently about 40% up on recent weeks but 10% down on a year ago. Tessa Murray, spokeswoman at Dresdner RCM, said: 'The irony is that it is exactly the right time to buy when the market is looking like this.'

Marc Gordon, managing director of Close Fund Management, said: 'Investors are piling into funds that are regarded as safe havens, but we have also been seeing money coming into ISAs that track technology shares in what can best be described as bottom fishing.'

Isas will lose one of their chief attractions in 2004 when the equivalent of basic-rate tax will be levied on dividends. There was more bad news for Isa providers when consumer magazine Which? criticised banks and building societies for giving misleading advice about them.

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