Endowments

An endowment is issued by a life insurance company that can provide tax benefits to high-income earners. They are taxable at a rate of 30% which means that, if your marginal income tax rate is higher than 30%, there may be tax benefits as it will reduce the tax payable on your investment growth. However, endowments can be restrictive as you are required to lock your money away for a minimum period of five years. If you own an endowment, you are liable for 30% tax on interest income, 20% tax on dividends, and CGT at an effective rate of 12%.