Guaranteed returns on many life assurance investment products will be revised downwards by between 0.25 and 0.5 percentage points with the introduction of capital gains tax (CGT) on October 1.
Neil Krige, the chairman of the Life Offices Association, which represents life assurance companies, says the guaranteed returns on life assurance investment products that guarantee both your capital and a return (normally between four and five percent) will have to be revised when CGT is introduced.
The reason for this is that the life assurance companies will have to pay CGT on your behalf on capital gains made in the underlying investments, resulting in the tax reducing your investment returns.
This will have the effect of reducing your guarantee on your returns by between 0.25 and 0.5 percentage points, but will not affect the guarantee on your capital.