Fractional shares are a core part of our product and one of the key ways that weāve moved forward on our mission to get everyone investing. Critically, fractional shares allow retail investors to start building a diversified portfolio with less. But your ability to hold fractional shares in your ISA is being put at risk by HMRC.
We are asking the Government to clarify the ISA Regulations to specifically include fractional shares as a qualifying investment, and we need your help! Join us in writing to HM Treasury by 13th October.
Support fractional shares in ISAs
- Download/save a copy of this template letter.
- Go to the Treasuryās portal for submissions for the Autumn Statement
- Select āPersonalā and āSavingsā tax
- Attach the template letter and submit!
Why is this a problem?
HMRC stated recently that they believe that the current ISA Regulations do not permit fractional shares. We believe that this is wrong and is not a good outcome for our customers and the retail investment industry as a whole in the UK.
We strongly believe fractional shares make investing more accessible for customers, especially those just getting started. It aligns directly with our mission to āGet Everyone Investingā. Fractional shares offer investors materially the same benefits and protections as whole shares.
What are we doing about it?
We have made clear to HMRC that we disagree with their interpretation of the ISA Regulations. We understand a number of other investment platforms are doing the same. We are continuing to engage with HMRC, the FCA, and the Government about resolving this matter.
We are also asking the Government to clarify the ISA Regulations to make it clearer that fractional shares are a qualifying investment, and to announce this as part of the Autumn Statement in November 2023.
What happens next?
We want to protect customersā best interests and deal with this situation in the best way for them. In cases where there is an issue with ISA accounts that can be repaired, HMRC typically requires the ISA Manager (Freetrade in this case) to settle any tax due.
However, weāre resisting HMRCās position that fractional shares are not permitted in ISAs. There is a possibility that, without further clarification on this, HMRC could force us to stop offering fractional shares in ISAs. This is an outcome that would undermine the progress that has been made opening up retail investing to more British savers.
While fractional shares can benefit investors of all sizes, banning them from ISAs would create barriers to entry for those investors with more modest amounts. This runs counter to our mission and our beliefs as a company.
We feel itās important that we robustly defend the real benefits that fractional shares offer to ordinary investors. It is very clear to us that fractional shares make investing more accessible and make it easier for investors to be able to effectively build a diversified portfolio.
Please only complete this form if youāre a U.K. resident!
