Fractional share trading to be allowed in Isa by HMRC
Published: 13:56 03 Sep 2024 BST
Fractional trading within tax-free individual savings accounts (Isas) is set to be allowed by the UK tax office, allowing investors to hold smaller portions of expensively priced shares.
Many trading apps, which are often used by younger investors, already allow fractional trading but HMRC said last year that they did not qualify for tax-free accounts.
But now the tax authority has U-turned on its stance to fit in with the new Labour government's plans.
The tax office is understood to be prepared to allow fractional shares within Isas for eligible shares, once new rules are made clear and take effect.
HMRC said in a statement: “The government has committed to changing the Isa rules to allow certain fractional shares. Taking a pragmatic approach, we will not raise an assessment on managers or investors for fractional shares acquired before these changes are made.”
The new regulations will be made public before coming into force, and HMRC is expected to work with the industry before this, as once they are in place any intelligible fractional shares will need to be removed from affected ISAs.
Media reports say the move is hoped to provide an overall boost in demand for shares - though US stocks like tend to be those that are individually priced in the hundreds, such as Nvidia at over $100 a share, Microsoft at over $400 per share, Meta over $500.
“The Government has committed to changing the ISA rules to allow certain fractional shares. Taking a pragmatic approach, we will not raise an assessment on managers or investors for fractional shares acquired before these changes are made.”
