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What is equalisation?

If you bought new units during the tax year, part of the price you paid was for income already earned by the fund up to the date you bought the units. This isn’t income you earned, but part of the cost you paid for your initial investment.

To make sure you're not taxed twice on this value, equalisation may be paid by the fund manager. It isn’t taxed as income but is used to adjust the cost you use for working out capital gains.