Close Menu
Investment GuideInvestment Guide

    Are Stocks more of a gamble than ever?

    16th June 2025

    Understanding the Long-Term Costs of Car Loans

    16th June 2025

    How to Choose the Right Conveyancing Service in the UK

    13th June 2025

    How to Approach a Casino Night (Without Losing the Plot — or Your Wallet)

    13th June 2025
    Facebook X (Twitter) Instagram
    • Stamp Duty Calculator
    • Lease Extension Calculator
    Facebook X (Twitter)
    Investment GuideInvestment Guide
    • Home
    • About
      • Authors
    • News
    • Tools
      • Stamp Duty Calculator
      • Lease Extension Calculator
    • Guides
      • Digital Investments
      • Getting Started
      • Investment Strategies
      • Specialist Investments
      • Other
    Investment GuideInvestment Guide
    Home » Income vs Accumulation Funds
    Other

    Income vs Accumulation Funds

    Helen BarklamBy Helen Barklam19th April 2020Updated:4th May 2023No Comments2 Mins Read
    Facebook Twitter Pinterest LinkedIn Tumblr WhatsApp Email
    Income vs. growth
    Share
    Facebook Twitter LinkedIn WhatsApp Pinterest Email

    Investment funds pools the capital of many individual investors to invest in one or more types of underlying financial securities. In the UK, investment funds are either open-ended investments companies (‘OEICs’) or Unit Trusts.

    Investment funds typically hold shares (which pay dividends), bonds (which pay interest) or a mixture of both. These dividends / interest payments are forms of income. The type of share (in the case of OIECs) or unit (in the case of Unit Trusts) you hold determines how this income is treated.

    Income funds

    With income shares/units, income from the fund is paid out to investors in cash. Investors can use these distributions as an income source or cash could be reinvested in the relevant fund or elsewhere. Distributions from income shares/units will be treated as taxable income, unless the investment was held within a tax-free wrapper (E.g. Stocks and Shares ISA).

    Accumulation funds

    With accumulation shares/units, no income is paid out to investors in the fund. Instead, all income is retained within the fund and reinvested. This has the effect of increasing the price of the units in the fund. Whilst investors are unable to draw an income from these shares/units, they will benefit from a capital gain on disposal of their shares/units. Upon sale of the shares, the capital gain would be subject to capital gains tax, unless the investment was held within a tax-free wrapper (E.g. Stocks and Shares ISA).

    Buying accumulation shares/units is generally more convenient and cost effective for investors who intend to reinvest any income distributions. 

    READ ALSO:  Derivative: definition and its types in finance
    Share. Facebook Twitter Pinterest LinkedIn Tumblr WhatsApp Email
    Helen Barklam

    Helen Barklam is Editor of Investment Guide. Helen is a journalist and writer with more than 25 years experience. Helen has worked in a wide range of different sectors, including health and wellness, sport, digital marketing, home design and finance. Helen aims to ensure our community have a wealth of quality content to read and enjoy.

    Related Posts

    Is a Free House Valuation Really Accurate in Today’s Market?

    12th June 2025

    8 Financial Lessons You Can Learn from Playing at Casinos

    11th June 2025

    Investing in High-Performance Machinery for Sustainable Industrial Growth and ROI

    3rd June 2025

    How UK Traders Can Secure Funded Accounts in 2025: The Real Deal

    19th May 2025

    A Guide to Using AI for Video Content Marketing

    24th February 2025

    Vyvy Manga

    9th October 2024
    Add A Comment
    Leave A Reply Cancel Reply

    Are Stocks more of a gamble than ever?

    By Danielle16th June 2025

    For decades, there has been a strong comparison made between trading stocks and gambling at…

    Understanding the Long-Term Costs of Car Loans

    16th June 2025

    How to Choose the Right Conveyancing Service in the UK

    13th June 2025

    How to Approach a Casino Night (Without Losing the Plot — or Your Wallet)

    13th June 2025
    Facebook X (Twitter)

    Company

    About

    Contact

    Authors

    Privacy Policy

    Terms and Conditions

    Categories

    Home

    News

    Stamp Duty Calculator

    Lease Extension Calculator

    Guides

    © 2025 Investment Guide

    Type above and press Enter to search. Press Esc to cancel.