Fractional shares will be permitted in ISAs

Savers will be able to hold fractional shares in individual savings accounts (ISAs) HMRC has said. This will allow ISA holders to invest in listed shares which they may otherwise be unable to afford.

Previously fractional shares did not qualify for tax-free accounts. However this is set to change as the government looks set to implement the previous government’s announcement in the 2023 autumn statement (para 5.43 of the Green Book) that it would introduce legislation to allow fractional shares to be held in ISAs. This was put on hold as a result of the 2024 general election.

HMRC said: ‘The government has committed to changing the ISA rules to allow certain fractional shares. Taking a pragmatic approach we will not raise an assessment on managers or investors for fractional shares acquired before these changes are made.’

The department said that fractional shares in...