sounds like a shakedown.
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Interesting issue. Also as we can’t buy whole shares we can’t mitigate any potential risk ourselves except to stop buying US shares for now.
Interesting that they only mentioned Freetrade despite there being a number of brokers doing this, wonder why the telegraph does that.
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Good to hear @acamp
A proactive approach to resolve is the way forward 
Yes that was a very unusual tactic from mainstream media to fingerpoint at Freetrade and not name others.
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Still free (and good) advertising - it could get someone checking out the app who’s not actually interested in fractional shares but who will just buy whole shares/ETFs etc! 
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Why bother engaging with HMRC?
Engage with the government and get them to scrap the stupid rule.
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Theres a progressive approach to these things.
The government will need to change the rules IF they need changed, however FT’s current postion is that they are within the rules and are seeking that to be clarified.
One thing to consider is IF HMRC dont give the assurance we need…
Martin Lewis holds a lot of sway with the government these days and would be a good ally for FT to reach out to on the basis of making investments affordable for all.
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He doesn’t really get involved with investing though, it’s all mortgages, state pensions, utilities and cash savings accounts he engages with.
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Worth a shot though …its an issue about affordable investing rather than investing advice.
But you are right its a little out of his usual field.
Anyway, hopefully this can be resolved at the first hurdle with HMRC.
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I wish you all the best talking to HMRC over this issue. For everyones sake (Freetrade & customer) it needs resloving as soon as possible.
My personal experiance trying to talk to them over anything is spending 2 hours on hold. One time when I was on the phone waiting and I got to talk to a human I had completly forgotten what I had phoned up for as my mind had drifted so much.
And then they cut you off. So you have to ring again and spend several more hours on hold.
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But before you can have the privilege of being put on hold again you go through an automated menu that I swear has changed the questions from the first time you phoned up and therefore you begin doubting yourself that you are being sent to the right department.
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A bit surprised that the first I hear about this is via a story in the paper, particularly as the company are just about to ask retail investors for money ( again ) .
‘In a statement, HMRC confirmed to The Telegraph that it was the tax office’s view that trading platforms were breaking the rules by putting fractional shares in Isas’
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Punish the the little guy for doing nothing wrong while the big guys do what they want and get away with it. Sums this country up.
That’s not really a fair assessment. Fractional shares are relatively new. And they aren’t really a thing, you can’t actually buy a fraction of a share. Freetrade buys a whole share and allocates you a fraction of the value.
So the rules likely never originally considered this being a thing. It just refers to a ‘share’ which you don’t own. So it likely needs tested and someone somewhere will need to make a decision on it, and if it’s not favourable then someone will need to suggest changes to the regulation or challenge the decision if it’s not favourable.
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Seems a strange distinction for HMRC to make.
If you buy an ETF (a whole share) you will indirectly own a fraction of the underlying shares that form the ETF.
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You’re not buying the underlying shares though in that example, you’re buying whole shares in the ETF.
There’s no direct similarity since your not buying a share created by Freetrade to represent x % of a share. You’re buying x% of a share. Which technically as far as I’m aware isn’t a thing, which is why Freetrade has to buy the whole share for you and split it on their books
Question I would have is why couldn’t it be treated the same way funds are treated ? Which as far as I remember you can actually buy fractional amounts of a fund in an ISA. I can’t remember what the rules say there
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Some companies haven’t even responded at all yet, so at least we got something from them when asked
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The last time I bought a fund in my (non-Freetrade) ISA, I bought 0.4744 of Vanguard Lifestrategy 80%.
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Maybe this isn’t something you have an answer on yet but if HMRC continue to insist they believe it breaks the rules, are Freetrade likely to peruse it further to get a more binding decision from the right people and/or courts?