HMRC have announced that regulations are to be issued which will allow certain fractional shares to be held in an Individual Savings Account. HMRC’s Tax-free Savings Newsletter 13 (September 2024) confirms that regulations are expected ‘in coming months’. This policy was first announced at Autumn Statement 2023 by the previous Conservative government, and a consultation had been conducted with industry. Spring Budget 2024 indicated that legislation would be brought forward by the end of summer 2024.
Where any fractional shares are not eligible under the new regulations, ISA managers will be required to remove them from affected ISAs. HMRC will enforce compliance strictly where an ISA does not comply with the regulations, ‘including considering the removal of ISA manager status, where necessary’.
HMRC had previously set out their view that fractional shares could not be held in an ISA, on grounds that a fraction of a share is not a share (ISA Regulations, SI 1998/1870, reg 7 provides that qualifying shares are ‘whole shares and not parts or derivatives thereof’). One alternative interpretation is that all shares held in an ISA are fractional shares (based around the principle that, where an individual buys 10 shares, the ISA provider does not literally hold 10 identifiable shares in that individual’s name).
Under the previous Conservative government, the Treasury had also consulted on the potential introduction of a UK ISA ‘to support a culture of investment in the UK’. It is not yet clear whether the Labour government intends to take this proposal forward.
HMRC have announced that regulations are to be issued which will allow certain fractional shares to be held in an Individual Savings Account. HMRC’s Tax-free Savings Newsletter 13 (September 2024) confirms that regulations are expected ‘in coming months’. This policy was first announced at Autumn Statement 2023 by the previous Conservative government, and a consultation had been conducted with industry. Spring Budget 2024 indicated that legislation would be brought forward by the end of summer 2024.
Where any fractional shares are not eligible under the new regulations, ISA managers will be required to remove them from affected ISAs. HMRC will enforce compliance strictly where an ISA does not comply with the regulations, ‘including considering the removal of ISA manager status, where necessary’.
HMRC had previously set out their view that fractional shares could not be held in an ISA, on grounds that a fraction of a share is not a share (ISA Regulations, SI 1998/1870, reg 7 provides that qualifying shares are ‘whole shares and not parts or derivatives thereof’). One alternative interpretation is that all shares held in an ISA are fractional shares (based around the principle that, where an individual buys 10 shares, the ISA provider does not literally hold 10 identifiable shares in that individual’s name).
Under the previous Conservative government, the Treasury had also consulted on the potential introduction of a UK ISA ‘to support a culture of investment in the UK’. It is not yet clear whether the Labour government intends to take this proposal forward.
