InvestmentsJun 16 2015

HMRC broadens Isa investment trust scope

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HMRC broadens Isa investment trust scope

HM Revenue and Customs has confirmed that the doors have been thrown open for Isas to invest in a broader range of investment trusts.

From the start of next month Isas can include securities (including retail bonds) and shares issued by housing associations and other co-operative societies or community benefit societies.

A broader range of securities issued by companies, including those admitted to trading on certain small and medium size enterprise (SME) markets, plus shares in a wider range of investment trusts, will all be allowed within an Isa and CTF wrapper.

This measure was announced in the coalition government’s final Budget earlier this year.

Current rules limit the type of securities that can be held in an Isa or CTF.

In order for shares in an investment trust to be eligible for Isa, broadly, no more than 50 per cent of the trust’s investments by value can be made up of securities that would not, if purchased on their own, qualify to be held in an Isa.

Now this restriction will be dropped.

The government’s latest tinkering comes after data released back in April by the Investment Association revealed that net sales of fund-based Isas slumped to just £325m in the key January to 5 April tax year end period, dubbed the “Isa season”.

That was a slide of 57 per cent from the £756m in the same period last year and came in spite of a much bigger allowance enabling investors to shelter more into Isas.

emma.hughes@ft.com