Fractional Shares and the Autumn Statement

Alex Campbell

December 5, 2023

Alex Campbell

The Chancellor intends to allow fractional shares in ISAs. We’ll keep working to see this implemented.

We’re thrilled to see the Chancellor clearly say that they plan to allow fractional shares to be held in an ISA. 

Confirmation came in the full text of the Autumn Statement that you can read here

Here’s the key point:

Allowing certain fractional shares contracts as a permitted investment – The government intends to permit certain fractional shares contracts as eligible ISA investments and will engage with stakeholders on implementation.

Thank you to everyone who provided their support by writing, tweeting, posting, and speaking out about this important change. Retail investors have, and will continue to benefit from fractional shares thanks in particular to everyone who raised their voice about this issue. 

What happens next?

While the Government’s statement is a welcome development, we are continuing discussions with HM Treasury and HMRC with a view to implementing a resolution that protects customers. 

We will also maintain an open dialogue with HMRC about any lost tax that they may seek to recover. We should note, as HMRC has publicly stated, "[w]hen an ISA manager allows investment in non-qualifying assets, [HMRC] would seek to recover any tax loss from the Isa manager [i.e. Freetrade] rather than the investor where possible.” 

We will provide further updates as soon as we have anything that we can share with you.

If you want to take action 

If you’re a current ISA customer or you’re considering opening an ISA with us and you want to take some proactive steps to remove fractional components of shareholdings from your account, there are a few things you can do.

Please note that there is nothing that you must do at this stage. 

When buying: You can use limit orders to only buy whole shares. This enables you to set a share price at which you would like to buy shares and will be “triggered” when the target price is reached. It does not result in fractional positions. 

When selling: You can specify the amount after the decimal point that you would like to sell. 

You can do this to specifically sell down fractional components of a shareholding. 

We’re also implementing some changes to our app that will make it easier for ISA investors to only buy whole shares, just like we offer for UK shares at the moment. 

If you have any questions or want to chat about this or other issues, you can head over to our Community forum where members have been discussing this.

The views expressed above are those of community members and do not reflect the views of Freetrade. It is not investment advice and we always encourage you to do your own research.

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