I have acquired (via a legacy) some fund accumulation ("ACC") units outside of a SIPP or ISA wrapper. I'd like to convert them to income yielding ("INC") units in the same fund. There are now significant capital gains on those units since the inheritance "reset" the book value so simply selling the ACC units to repurchase INC units of the same fund would seem to have me paying some tax (which obviously I'd prefer to minimise).

However, my understanding is that under the capital gains tax rules on "section 104 holdings", "bed and breakfasting" and "matching" (see here or here), if I repurchase units in the same fund in the "same class" within 30 days then any gain (or loss due) is just calculated relative to the sale price, and the book cost remains unaffected.

My question is: do "ACC" and "INC" units in the same fund (and in the same "class A"/"class D"/"class R" units) count as being in the "same class" so far as HMRC are concerned? So if I sold the ACC units and immediately (next day) reinvested all the proceeds in INC units would there be any CGT liability triggered or would I simply now have a holding of INC units with the same original book value as the ACC units did?

1 Answer 1


It seems there's a closely related issue with the "clean priced units" introduced by the RDR reforms. Switching into those could be done without a CGT event, and in this article on the topic I find (my bold):

Shifting bundled share classes to clean classes can be achieved by switching (that is, a concurrent instruction to sell then buy) or by share class conversion, which is effectively an internal change on the register. Where exchange is undertaken at the behest of the investor through a switch process, it must involve only a single conjoined instruction from the investor and there must be no interval between the sell and buy events beyond the minimum ordinarily necessary to achieve the transactions.

In June 2013, new section 103F was added to the Taxation of Chargeable Gains Act 1992 to put the matter on a statutory footing. In essence, where the same investor in the same capacity exchanges units or shares of one class of a fund for units or shares of another class of the same fund, it will generally be treated as a share reorganisation. Accordingly, it is not a disposal for the purposes of CGT and the acquisition cost from the old share class is rolled over to the new holding.

This will apply to most exchanges between different AMC share classes of the same fund and/or exchanges between accumulation and income classes of the same fund.

The article also provides a useful counterexample of the sort of change which would trigger CGT:

...exchanges that involve some change in fund assets or investor rights, such as switching from an unhedged class to a hedged class (or vice versa), are treated as disposals.

Additionally, there's a Reddit thread on the topic which includes some links to archived HMRC guidance which confirms:

So, where an investor switches between income units and accumulation units in a single sub-fund of an umbrella scheme ... In a straightforward switch, where no consideration is given or received apart from the old units and the new units, the switch would be treated as not giving rise to any disposal for CGT purposes. The new units will be treated as having the same date of acquisition, and the same capital gains cost, as the old units.

So this is good news: I can switch to income units without worrying about triggering CGT.

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