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HMRC internal manual

Capital Gains Manual

From
HM Revenue & Customs
Updated
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Unit trusts: accumulation units

No distributions are made to holders of accumulation units. Instead the net amount that would normally be distributed is automatically reinvested in the fund. No new units are issued but the value of the existing holding of units is increased. The notional distribution is treated as allowable expenditure where it is subject to Income Tax in the hands of the unit holder. This treatment applies to both UK resident and non-UK resident trusts. Indexation allowance is given from the date the unit holder became entitled to the notional distribution.

NOTE. If a taxpayer is within the charge to Capital Gains Tax, neither indexation allowance nor taper relief apply to disposals of assets on or after 6 April 2008. Previously indexation allowance had been frozen at April 1998. For indexation allowance see CG17207+ and for taper relief see CG17895+.