By Laurence Fletcher

LONDON (Reuters) - Sales of tax-advantaged Individual Savings Accounts in the traditionally busy ISA season were the worst on record, according to industry data, as the credit crisis continued to hit investor confidence.

Net sales of ISAs, which often receive a boost in March and the first days of April as investors rush to take advantage of their tax allowance in the run-up to the end of the tax year, were 532 million pounds from March 1 to April 5, according to the Investment Management Association (IMA).

That was nearly half the 957 million pounds a year ago, before the credit crisis began. In 2000, shortly after ISAs were introduced, sales were 3.3 billion pounds.

"It's been pretty disastrous," said Ben Willis, head of research at investment adviser Whitechurch Securities.

"There's plenty of negative sentiment out there, markets have been a bit panicky and people have just shied away."

ISA sales in the 2007/2008 tax year were also the lowest on record, an IMA spokeswoman said.

Meanwhile, overall net retail fund sales rose to 414 million pounds in March from 316.8 million pounds in February, although they are down on the 1.2 billion pounds seen a year ago.

This second consecutive month of inflows comes after three months of net outflows, including record net outflows in January, as investor confidence wilted in the face of the credit crisis.