Hi folks, new to Freetrade here and I’m very interesting in opening a Stocks & Shares ISA to avoid the tax implications of any potential gains I might make.
I am aware that there is a £2 minimum order size, at the time of writing section 14 of the general Terms and Conditions states the following:
If you hold a position in a Security which is worth less than £2.00 (for example, if the market value of your position falls, if you sell part of your position, or as a result of a corporate action on that Security), you may not be able to sell this position. In order to sell the position, you may need to buy more of this Security so that you own a position worth more than £2.00 and are then able to sell your position in this Security. In circumstances where this is not possible, you may not be able to sell your position.
Meanwhile, at the time of writing this help article states the following:
You can close your ISA in-app by tapping the ‘Close your stocks & shares ISA’ button in the ‘Manage your ISA’ screen. In order for this to work, you’ll need to have sold all of your shares and withdrawn/transferred out all cash first.
It’s possible I’ve missed something or misunderstood, but it appears to me that a situation could arise where one has shares left in their ISA which are valued at less than £2 (and thus can’t be sold), but for whatever reason are no longer available for purchase. As a result, it would be impossible to close the ISA and prevent further monthly ISA account charges since the ISA cannot be completely emptied of securities.
Can anyone shed some light on whether this scenario could occur and how Freetrade would handle it if it did?
If you hold a position in a Security which is worth less than £2.00 (for example, if the market value of your position falls, if you sell part of your position, or as a result of a corporate action on that Security), you may not be able to sell this position. In order to sell the position, you may need to buy more of this Security so that you own a position worth more than £2.00 and are then able to sell your position in this Security. In circumstances where this is not possible, you may not be able to sell your position.
Thanks @Big-g. I did put the same quote from T&C’s in my original post.
Upon giving it further thought, I realise now there’s potentially other situations in which a similar scenario my occur. For example, if a company goes into administration and trading of its shares is suspended, it would not be possible to sell / move the shares and therefore presumably not possible to close the ISA?
Not sure of the other examples you may be thinking of but I guess a value of under £2 in a share is seen as an acceptable loss if you leave. Yes it is wrong to lose an investment I guess but expecting them to do free trades for such a small number to get you that last penny is also pretty unfair when leaving.
I understand that there will always be concern where money is involved but I would like to believe that should such a situation occur I’m sure Freetrade would be happy to help close the ISA for you rather than keep charging you £3 a month because you are unable to liquidate a stock that is under £2?
Perhaps a quick official comment would help to nip hypothetical concerns such as this in the bud.
Indeed my concern is not really around losing the £2 that can’t be sold, and of course £3 a month for the S&S is hardly significant.
But nevertheless it would be good if Freetrade could clarify how they handle such situations - as noted above there are other situations in which one may not be able to close their ISA, e.g. a particular stock contained within the ISA had been suspended from trading (I’m thinking of the likes of Thomas Cook and Debenhams here).
That being said, I suspect exactly what Freetrade can do in such situations is constrained by the ISA regulations.
