Accumulation units
A fund offers two types of units of shares you can buy – accumulation, or income. The difference is in how they handle the income (i.e. the dividends or interest) the fund generates.
Accumulation units or shares reinvest the fund’s income the fund generates, while income units pay it out. This usually means that the price of accumulation units or shares will rise over time as more income is received and reinvested.
If you hold a fund in a SIPP or an ISA, any income and gains are free of tax. But if you hold a fund in a Dealing account, income and gains are taxable. It’s important to remember that this includes income from accumulation funds – even though you’re not paid it directly. See also income units.
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