How to handle fund equalisation for UK Capital Gains Tax

Updated October 2026 · Income and accumulation units · Worked examples

If you bought units in a fund, your first tax voucher may show an equalisation figure. It isn't income, but it does change the cost you use when you work out capital gains tax.

The short answer

Income units: deduct the equalisation from your cost basis for the units. Only the non-equalisation part of the distribution is taxable income.

Accumulation units: the income retained in the fund is added to your cost basis, and the equalisation is deducted. Your cost basis goes up by the net income, which is the gross distribution minus the equalisation.

Much of the advice online seems to conflict about accumulation units, but it's almost always because it uses the same terminology for different things. See why.

What equalisation is

When you buy a fund, part of the purchase price you pay will be for income already earned in the current distribution period. When the fund distributes, the amount you paid for the income comes back to you as equalisation. HMRC treats it as a return of part of your purchase price, not income, so it comes off your cost (CG57705).

Same purchase, two unit types

You buy 100 units for £100£100

£90 capital

£10

£10 of the price pays for income the fund had already earned. The fund then earns £10 more while you hold the units, and pays out a £20 distribution.

Income units £20 paid to you

Your units£90

£90

Cash received£20

£10

Cost for CGT

£90

£100 − £10

Taxable income

£10

£20 − £10

Accumulation units £20 kept in the fund

Your units£110

£90

£10

Cash received£0

None. It stays in your units.

Cost for CGT

£110

£100 + £20 − £10

£100 + £10

Taxable income

£10

£20 − £10

Capital Income you paid for when buying (equalisation) Income the fund earned for you

Do you deduct equalisation on accumulation units?

Fund managers and forums often say "don't deduct equalisation on accumulation units", while HMRC's manual says to deduct it. Both can be right. Add the gross distribution to your cost and you must deduct the equalisation. Add the net figure, which many vouchers show, and the equalisation is already taken off.

Four ways to book accumulation units

Using the same example: £100 paid, £20 distribution with £10 of it as equalisation. Two methods are right and give the same answer.

Income added to cost	Equalisation	Sum	Cost	Result
Gross, £20	Deducted	£100 + £20 − £10	£110	Correct
Net, £10	Not deducted	£100 + £10	£110	Correct
Net, £10	Deducted	£100 + £10 − £10	£100	Too low. Equalisation taken off twice
Gross, £20	Not deducted	£100 + £20	£120	Too high. Your purchase already included the equalisation and it was added a second time.

Reading your tax voucher

Vouchers rarely say whether the income line is gross or net. A quick check settles it: multiply the rate per unit by all your units, Group 1 and Group 2 together, and compare the result with the income figure.

My Equity Fund Acc
Dividend · Example only

Group 1 units10,000.00

Group 2 units20,000.00

Rate per unit0.5000p

Equalisation£56.40

Dividend£93.60

Rate × units: 30,000 × 0.5p = £150.00. That's the gross distribution, and it doesn't appear anywhere on the voucher.

£150.00 = £56.40 + £93.60. So the dividend line is already net of equalisation.

For CGT on these accumulation units: add £93.60 to your cost and make no separate deduction. Or add £150.00 and deduct £56.40. Both give +£93.60.

For income tax: declare £93.60 of dividends.

Group 1 and Group 2: the equalisation relates only to the 20,000 Group 2 units. The 10,000 Group 1 units were held for the whole period, so all of their 0.5p is income.

Entering equalisation in ShareCalc

Add the appropriate income transaction, then:

Enter the distribution gross amount, including the equalisation.
Put the equalisation in the distribution's Equalisation field.
Give the distribution an ex-date as well as the payment date.

ShareCalc does the rest. It automatically updates your CGT cost basis and tracks your income.

Try ShareCalc

HMRC references

This guide explains how equalisation generally works and how ShareCalc treats it. It isn't tax advice. If your situation is unusual, check with a qualified adviser.