Equalisation payment

Just got a dividend approx 60% dividend and 40% equalisation. Obviously the dividend goes into the dividend column, and the equalisation I read is subtracted from the purchase price. Is the purchase subtraction only for this tax year if selling, or does it carry over for future years if not selling as a constant part of the original purchase price calculation?

Comments

  • ColdIron
    ColdIron Posts: 9,692 Forumite
    Part of the Furniture 1,000 Posts Hung up my suit! Name Dropper
    edited 12 January 2023 at 3:30PM
    The equalisation payment is a return of capital so it will reduce your book cost as a one off event. Obviously the new book cost will remain the same until you buy again (or forever if you never make another purchase)
    The equalisation payment reflects the accrued underlying dividend that you 'bought' as part of the unit price and means you won't have to pay dividend tax on the entire dividend distribution (although it would increase the capital gain upon sale)
    If you don't buy again you will receive the whole dividend at the next ex dividend date
    Edit: I assume this is an 'Inc' (Income) fund
  • talexuser
    talexuser Posts: 3,504 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    Thanks, yes unwrapped inc to simplify tax returns - ISA and SIPP maxed every year.
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