Taxation of Cash funds

PosterBoy77

Here is a question for financial advisors and other knowledgeable people here.

I am not far of being a higher rate tax payer and was wondering if I could put cash into a cash fund instead of a savings account to allow the gain to be taxed as capital gains rather than income?

For example I was looking at the Gartmore Cash fund as mentioned here:

http://www.gartmore.com/uk/investors/fundrange/oeics/cash.htm

The growth of the fund appears to be more or less in line with cash on deposit. As they are accumulation units I would have to sell a few units every year to effectively crystallise a gain, instead of receiving interest. In this scenario I was hoping I could make use of my annual Capital Gains Tax allowance. Would it be taxed in this way?

jem16

The dividends will still have to be declared on your tax return as income even though they are reinvested as far as I'm aware. Someone will no doubt correct me if I'm wrong.

Will the dividends PLUS tax credit push you into the higher rate tax? If so you will then have another 25% tax to pay on the dividend.