Taxation of Mutual fund

peter021072

I've found an income bond fund I'd like to buy, but unfortunately it's not eligible for a ISA according to my broker.   As with many of these funds, there are both accumulation and income units. 
Since all profits from accumulation units are rolled up inside the bond, would any potential gain need to be declared only for income tax purposes & not capital gains tax?

In the Income details it states:

Income paid:	Monthly
Type of payment:	Dividend

greatkingrat

At the end of the year you will get a statement showing the dividends received during the year. This amount will be chargeable to income tax regardless of whether you are being paid the dividends or they are being rolled up in an accumulation fund. When you sell the fund, any profits (after deducting the notional dividends) will be subject to capital gains tax. The end result should be the same for tax purposes whether you pick the accumulation or income units, however the income units are probably easier to keep track of from an admin point of view as you can see the dividends being paid every month/quarter rather than having to make adjustments at the end of the year.

peter021072

Thanks for this.