Equalisation payment

talexuser

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?

ColdIron

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

Thanks, yes unwrapped inc to simplify tax returns - ISA and SIPP maxed every year.