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I have an ISA with Freetrade. I bought shares of Arrival between 2021 and 2022. Arrival has been delisted. Freetrade has notified me:

Further to our previous notification, this stock fails to meet HMRC's eligibility criteria for being held in an ISA as it is no longer listed on a recognised stock exchange.

As a result, Freetrade has transferred your holdings to your GIA effective today 28/02/2024.

My ISA account "activity" records show the purchase details but no sale details.

My GIA ("general investment account") now shows I hold Arrival shares but there are no purchase details.

Is the investment considered to never have been in the ISA? Or is it considered that I have purchased new shares outside the ISA on 2024-02-28 at some unknown-to-me price?

Given that the shares have lost 99.88% of their value, it would be nice to offset the loss against my capital gains allowance, but it is not clear to me what the relevant calculations should be.

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    This sounds like a "ring HMRC" type question to me, they're usually very helpful for this sort of thing.
    – Vicky
    Commented Mar 1 at 9:14

2 Answers 2

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Here's chapter and verse:

34.—(1) For the purposes of capital gains tax on the occasion when the title to account investments is transferred from an account manager to an account investor there shall be deemed to be a disposal and reacquisition by the account investor of those investments for a consideration equal to their market value at the date of the transfer.

I found that via this article (unfortunately paywalled unless you visit via Google..) which is more explicit about the idea that the delisting event triggers a transfer like that:

Under the Isa regulations, when the title to an account investment is transferred from the account manager to the investor, there is a deemed disposal of the shares and a subsequent reacquisition. For CGT purposes, this effectively means that the investor is treated as if they acquired the shares based on the market value at the date of the transfer. This value will form the base cost for any future sale.

So it counts as you acquiring them on the date of the transfer, at the market value on that date. I'm not actually sure how you'd find that value, though. Maybe you could ask the ISA provider?

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  • I can only see the first two sentences of the reply in that article but the legislation seems clear enough. So, part two of my question seems to be answered in the affirmative. cheers.
    – jhnc
    Commented Mar 1 at 22:09
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    Oh, seems it's paywalled if you don't visit it via Google :-) What was part 1? If it's "Is the investment considered to never have been in the ISA?" then the answer to that is No. Commented Mar 1 at 22:46
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I found a similar question on the HMRC forum.

Capital loss on US bank shares transferred from ISA to individual account

Excerpting:

To clarify, if I sell this penny stock I am forced to sell through my non-ISA account. In this act: I bought this stock through ISA account and sell this stock through my non-ISA account, do I have to report gain or loss to HMRC?

No, as stocks in an ISA account do not pay Capital Gains Tax.

So, the answer to my question appears to be "no" to both parts. However, I find the rationale provided by "HMRC Admin 19" rather unclear - the whole point of the question is that the stocks in question are not in an ISA account (any more).

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    As you say, that rationale is unclear. I wouldn't trust it. Commented Mar 1 at 20:22

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