'Dramatic' increase in number of Isa sales

As the tax-free Isa (individual savings account) selling season draws to a close on Monday, a survey shows that the number of sales have risen by 16.4 per cent compared with last year, which was the worst since the Isa was born five years ago.

The survey, by the Prudential savings and insurance group, claims that 46 per cent of IFAs (independent financial advisers) have experienced a "dramatic" increase in sales, and the amount of money going into Isas has risen 17 per cent. This suggests that investors are putting slightly higher sums into these accounts.

Roger Ramsden, marketing director at Prudential UK, said: "A recovery in stock markets has resulted in an increase in Isa sales and this is also being fuelled by a much more positive outlook on equities from investors."

Pru's research revealed that 59 per cent of IFAs feel that their clients have a more positive attitude to investment risk compared to this time last year, with 9 per cent having a very aggressive outlook when it comes to expected future growth.

The more bullish mood may stem from the fact that this is the last tax year in which Isas are available in their original form. From Tuesday, when the new tax year begins, the tax credit on dividends paid out by shares held in an equity Isa will be withdrawn. And from April next year the maximum annual amount which can be invested in an Isa will drop from £7,000 to £5,000. A YouGov survey last month revealed that as a result of these changes, nearly half of all equity Isa investors will be less likely to invest in these accounts. One in eight said they will probably not invest any more.