Investors are being pushed towards a scandal-hit asset class as they seek to avoid the new 50 per cent rate of income tax.

Private client brokers say there is a desperate search for investment products such as zero dividend preference shares, which are taxed as capital gains rather than income.

These investments, which were commonly used to fund school fees, were responsible for the split capital trust scandal of 2001, in which investors lost hundreds of millions of pounds.

Since then investors and brokers have shunned the shares, with the number of split capital trusts plunging from 104 at the height of the scandal to just 19 today.

But private client brokers now expect a wave of new issuances as investors look to replace income with capital gains.

From next April the top rate of income tax for people who earn more than £150,000 will be 50 per cent – but capital gains are taxed at just 18 per cent.

”The theory behind zeros makes more sense than ever,” said Hugh Adlington in Rathbones’ private client division.

He has already been receiving calls from brokers in recent weeks and expected to be ”deluged” by investment trusts looking to raise zeros.

Private client brokers are even putting pressure on investment trusts to raise more zeros to meet investor demand.

Investment companies are also keen to raise money via zeros as many are being offered unattractive lending terms by banks.

Zeros are a type of share offered by investment companies that aim to provide investors with a return on their money by investing in the shares of other companies.

One investment company, Ecofin, is raising £60m in zeros. John Murray, chairman, said his company was the ”canary in the mine”, but said demand from private client brokers had been much higher than expected.

But the zeros scandal is still fresh in some investors’ minds, with many investment companies reluctant to issue them as a result.

Companies with zeros found themselves steeped in debt after the dot.com crash of 2000 and were forced to pay back their bank loans first, leaving many zero shareholders with nothing.

Many investors had believed the returns were guaranteed, with some marketed as ”the investment that helps you sleep at night”.

The Financial Services Authority announced a compensation pot of £194m in 2004, though this fell short of the hundreds of millions of pounds lost by investors.

The investment trust industry believes the lessons have been learned from the split cap scandal.

”We’ve all learned that even a zero can lose money’” said Daniel Godfrey, director of the Association of Investment Companies.