Fractional shares: what are they and why HMRC is worried?

Investors who have flocked to investment apps offering fractional shares in an Isa could lose the tax-free status of their portfolios.

Overhead view of young woman checking stock market data on smartphone while drinking coffee
(Image credit: Getty Images)

HMRC is becoming more concerned about the use of fractional shares on investment apps and platforms such as Freetrade, Trading212, InvestEngine and eToro, which have launched in recent years to appeal to younger and more tech-savvy investors. They let users research and build a portfolio of shares and exchange traded funds (ETFs) either in a general investment account or in stocks and shares Isa from their smartphone.

The apps also offer fractional shares, letting investors buy a portion of a stock rather than the full amount and hold it in an Isa from just £1.

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Marc Shoffman
Contributing editor

Marc Shoffman is an award-winning freelance journalist specialising in business, personal finance and property. His work has appeared in print and online publications ranging from FT Business to The Times, Mail on Sunday and the i newspaper. He also co-presents the In For A Penny financial planning podcast.