OEIC advantages over unit trusts

As it can cost less for fund managers to run an OEIC than a unit trust, some companies reduced their initial charges when they converted their unit trusts to OEICs, although annual charges remain much the same.
Another advantage of OEICs is that it may be cheaper to switch between a manager's different funds than between unit trusts because of the OEIC’s structure. For example, you may decide to invest in a fund that has more of its fund invested in equities (a stock or share in a company).
There are hundreds of funds available in the market and the funds you choose at the start may not be the ones you wish to keep forever, so flexibility is important.
Income (the yield, dividend or interest) from these funds can be distributed or built up within the fund and is paid net of basic rate tax. If you’re a higher rate taxpayer you will have to declare this income on your tax return and pay the difference between the tax deducted and either higher rate tax, in the case of interest, or 32.5% in the case of dividend income.
If you’re a non-taxpayer you can’t reclaim the tax which has been deducted at source from dividend income. But, you could reclaim tax deducted from income that is classed as interest. For example you could reclaim the tax you’ve paid from a fixed interest fund or a fund holding a large proportion of interest-bearing assets such as corporate bonds.
If you cash in, or what’s commonly known as surrendering, an OEIC you’ll pay capital gains tax on any gain, or profit, you’ve made.
However, everyone as an individual has an annual allowance (£9,600 for 2008/09) and as long as the gain together with any other gains you may have in the same tax year is less than the allowance, you won’t pay any tax. If you gain more than the annual allowance, you will be taxed at a single rate of 18%.