Investment platforms enabling you to purchase partial shares within an Individual Savings Account (ISA)
UK Government to Allow Fractional Shares in ISAs: A Step Towards Accessible Investing
The UK government has announced its intention to allow certain fractional shares to be held in Individual Savings Accounts (ISAs), a move that could make investing more accessible to a wider audience. The Financial Conduct Authority (FCA) is working with the Treasury and HMRC on these changes, though the exact timeline for their implementation remains uncertain.
This development comes as more people are embracing trading apps that allow buying and selling shares from a smartphone, making investment more convenient than ever. Companies like Freetrade, InvestEngine, and Trading212 are among those that already offer the ability to purchase fractional shares through their ISAs. Notably, Moneybox has consistently allowed users to include fractional US shares in its stocks and shares ISA.
The clarity around fractional shares in ISAs can allow more people to build diversified investing portfolios from much lower starting amounts. With this change, investors and trading apps have been given the green light to continue backing fractional shares and receive tax-free returns through an ISA, without incurring any penalties.
Dan Moczulski, managing director of eToro UK, supports this idea, stating that allowing fractional shares in ISAs can encourage more savers to invest and diversify their portfolios with smaller amounts of money, without paying tax. Brian Byrnes, head of personal finance at Moneybox, also welcomes HMRC officially changing the regulations to allow fractional shares in ISAs.
However, it's important to note that not all platforms are jumping on the fractional shares bandwagon just yet. For instance, eToro does not currently offer fractional shares as part of its ISA solution.
The changes to ISA rules are expected to be officially amended, possibly before the Autumn Budget. HMRC has also committed to not raising an assessment on managers or investors for fractional shares acquired before the changes are made.
For the most accurate and up-to-date information, it would be advisable to check the latest announcements from HMRC or the FCA directly. As these changes unfold, it's an exciting time for those looking to invest in the stock market, with more opportunities to build a diversified portfolio and grow their wealth.
[1] Telegraph: UK to allow fractional shares in ISAs [2] Financial Times: ISA changes: What you need to know [3] Moneybox: ISA changes 2024 [4] GoCompare: ISA changes 2024
- This development in UK finance could encourage more individuals to dip their toes into personal-finance management and investing, as the government allows fractional shares in Individual Savings Accounts (ISAs).
- Technology has democratized finance by making trading apps readily available, changing the game for those looking to invest with pensions, savings, or regular income.
- For those who are already harnessing platforms like Freetrade, InvestEngine, Trading212, and Moneybox, the new ISA rules mean they can build more diverse portfolios with reduced starting amounts, earning tax-free returns while investing in stocks and shares.
- Amidst the growing interest in fractional shares, it's essential to keep track of the latest announcements from the Financial Conduct Authority (FCA) and HMRC for the most accurate information on whether eToro and other platforms will join in offering these opportunities.
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