Winterflood Business Services supports the recent move to allow certain fractional shares in tax-free Individual Savings Accounts (ISAs). HM Revenue & Customs, the UK tax authority, has decided to make the change in a bid to encourage more investment into the stock market.
According to draft legislation, viewed and reported by the Financial Times, the change could come into effect as soon as 30th September 2024, ahead of an upcoming change to law by the new UK government.
We are delighted to hear of this change, as we believe that the move will be positive for investment platforms and our clients, allowing additional investment in managed portfolios. Furthermore, we believe that this will enable our clients to provide a more holistic offering to their end-customers, and diversification of their investments.
Winterflood, as a whole, champions inclusivity for all investors, from institutions to retail investors. We believe that allowing fractional shares to be included in tax-free vehicles such as ISAs will be a clear step towards allowing all investors their own piece of the stock market.
What are Fractional Shares?
Fractional shares or ‘fractionals’ allow clients to hold shares to a number of decimal places rather than being restricted to whole shares. Open-Ended Investment Companies (OEICs) and most other funds have traded to typically to 4 decimal places for decades, which allows precise percentage allocations, but equity shares have traditionally been trade to whole shares.
For Managed Portfolio Service (MPS) providers this means that no matter when or how much an investor puts money into a model their allocation to shares will be more precise to the expected percentage allocation. It has also allowed for customised or direct index style propositions to be brought to market as we have support with Fundment.
If you would like to discuss article, or topic in more detail, please contact: Steve Croucher, Commercial Officer at Winterflood Business Services.
