C Rson

Hi Even if you get taxed the same every year, doesn't it mean that you get CGT taxed twice on the dividends in accumulation funds when you come to sell? For example: Year 0 Invest 50,000 in an accumulation fund. Year 1 Dividends of 4,000 that are reinvested but show up on the annual tax certificate as dividend and thus subject to CGT. Year 2 Dividends of 4,000 as above. Year 3 Dividends of 4,000 as above. Year 4 Sale of entire holding (assume no growth) of 62,000 - original cost = 12,000 profit and subject to CGT after allowances. But in a distributing fund: Year 0 Invest 50,000 in a distribution fund. Year 1 Dividends of 4,000 that are reinvested and subject to CGT, but the book cost increases. Year 2 Dividends of 4,000 as above. Year 3 Dividends of 4,000 as above. Year 4 Sale of entire holding (assume no growth) of 62,000 - original cost (62,000) = 0 profit and no CGT due on the sale. Thanks