Well it’s no doubt you can hold an ETF in your ISA and that ETF can have fractional stocks so we agree on that I’m sure.
But when you said ETFs are “all good” here, I’m saying they are not “all good” since you won’t be able to buy 0.5 of the ETF and still have to buy full units of the ETF so I wouldn’t call that all good at all.
A fraction of a share is not a share and therefore cannot be held in ISAs. ‘Shares’, as referred to in paragraph 7(2)(a) of the ISA Regulations, refers only to whole shares and not parts
Where fractional shares are an exchange traded fund they are not subject to the same restrictions.
I have shortened the statement, not to change the meaning, but to hopefully make it clearer. The statement is in relation to what is allowable to be held in your ISA wrapper. Different regulations govern what an ETF can and cant hold.
Well here is the statement exactly. I believe you are simplifying this to read as “If the investment is an ETF then it is an exception and it can be fractional and not a full unit in an ISA”. But I am reading it as “shares in an ETF can be fractional so you can still hold an ETF in an ISA”. The “they” part for me is referring to the fractional shares in the ETF not the ETF itself, because they are basically saying you have no control over the shares in the ETF.
If your reading is correct, then their statement is contradictory as that would mean I couldn’t hold a fractional share directly but I am allowed to hold one directly if a full share of a collective investment scheme holds the fractions for me which is just daft
That would actually help retail investors to highlight the whole thing is stupid.
Also if HMRC do decide that fractions aren’t allowed.
Will they allow us to round up position containing fractions to the next whole share as a kind of exemption
I currently hold 120.something shares in Tritax Big Box.
Will HMRC say something like.
‘Fractions are no longer elegible in ISAs and you have one of 2 options. You can sell the fractions or make any trade that includes selling the fractions which might bring a tax liability, or as an exemption we will allow you to round up to the next whole share and they can be sold as per ISA tax exemption rules as you now are selling as full shares’
I just wonder how the mechanics will play out.
For the record I thing BBOX is a total and am bullish. But just wanted to play the scenario
So now it is announced. “Savers and investors will be able to open more than one Isa of the same type each year. The Government also intends to permit fractional shares to be held in Isas, which will make it easier to invest in companies whose share price has risen strongly”