The annual cost of tax, asset class by asset class
How many basis points of return each part of a portfolio loses to tax each year, under the tax system that applies to you, and what that costs over 10, 20 and 30 years.
By Eldar Edmond Grady, CEO, PPLI.com. Research checked 27 September 2026.
Singapore law as at 27 September 2026, Year of Assessment 2026, for an individual resident in Singapore who holds the portfolio or policy personally. Home-country rates are the 2026 figures stated on the page.
PPLI.com is a research publisher, not an insurer, broker or financial adviser, and is not licensed by the Monetary Authority of Singapore. Nothing here is an offer of insurance. To buy a policy, deal with an insurer or adviser licensed or exempted by MAS and check it on the MAS Financial Institutions Directory.
Tax drag in the first year
In the first year, before any unrealised gain has built up, the tax drag on one asset class is its return times the tax on the part of it that is taxed that year.
drag = return x [income share x rate on income + (1 − income share) x turnover x rate on gains]
rate on income = dividend share x dividend rate + (1 − dividend share) x interest rate
Under the Singapore-only preset every rate is 0, so the drag is 0 and the after-tax column equals the untaxed reference. The policy panel shows the same portfolio inside a policy before charges, taxed only when the policy ends.
Two rows under two systems
Hypothetical. Equities returning 7%, a quarter paid out as dividends, 10% of the rest realised each year; bonds yielding 4.5%, all interest.
US person equities 7% x (25% x 23.8% + 75% x 10% x 23.8%) = 54 bp
bonds 4.5% x 40.8% = 184 bp
China domicile equities 7% x (25% x 20% + 75% x 10% x 20%) = 46 bp
bonds 4.5% x 20% = 90 bpA row that realises only part of its gains builds up unrealised gains, so the amount realised, and taxed, grows year by year. The first-year figure is the floor, and the horizons table shows the rest.
What the calculator applies
Horizons
The same year-by-year projection as the other instruments, at 10, 20 and 30 years, with the value if everything were sold at the end and the tax on the remaining gain paid.
The UK return
The first-year figures describe the years after return; the horizons table applies 0 for the years you remain in Singapore and UK rates after.
Inside a policy
Before charges: the gain above premiums taxed once, on surrender or at death, at the policy rates of the tax block, with the entry cost taken from the premium.
Common questions
Why is the drag 0 for Singapore?
Because a resident individual pays no Singapore tax on foreign-sourced income received in Singapore, on one-tier dividends or on interest from approved banks, and gains on investments are generally not taxable. With every rate at 0 there is nothing to measure.
Why does the drag rise after the first year?
Rows that realise only part of their gains each year build up unrealised gains, so the amount realised, and taxed, grows year by year. The first-year figure is the floor.
Instruments and related reading
Wealth simulatorThe whole horizon, with withdrawalsOpen →PPLI break-evenWhether a policy pays for its chargesOpen →Tax intelligenceThe same portfolio under each tax systemOpen →Tax efficiency for Singapore residentsThe written analysis behind the presetsOpen →PPLI.com is a research publisher, not an insurer, broker or financial adviser, and is not licensed by the Monetary Authority of Singapore. This page is general information about how tax systems treat a portfolio and a life insurance policy. It is not an offer of insurance and not advice on any product. A policy from an insurer not licensed in Singapore is outside the Policy Owners' Protection Scheme and outside Singapore statutory nominations.
The authorities this page relies on
Income Tax Act 1947 s 13(7A), s 13(1)(za) and s 13(1)(zd)
Foreign-sourced income received in Singapore by a resident individual is exempt, except income received through a partnership in Singapore (s 13(7A)(b)). Dividends paid by Singapore-resident companies under the one-tier system are exempt (s 13(1)(za)), as is interest on deposits with approved banks (s 13(1)(zd)). sso.agc.gov.sg, ITA 1947 s 13
IRAS, gains from sale of property, shares and financial instruments
Gains from the sale of shares and financial instruments are generally not taxable, and gains from trading can be. IRAS lists "payouts from insurance policies as they are capital receipts" among gains that are generally not taxable. iras.gov.sg, gains
Rev. Proc. 2025-32 and 26 USC 1411
For 2026 the 37% rate applies above US$640,600 of taxable income for a single filer and the 20% rate on long-term gains and qualified dividends above US$545,500. The 3.8% net investment income tax (s 1411) does not apply to nonresident aliens, so it does apply to US citizens abroad. Top combined rates: 40.8% and 23.8%. irs.gov, Rev. Proc. 2025-32
gov.uk, tax rates on property, savings and dividend income
For 2026/27: savings income at 20, 40 or 45%, dividends at 10.75, 35.75 or 39.35% from 6 April 2026. Savings rates rise to 22, 42 and 47% from 6 April 2027. gov.uk, rate changes
gov.uk, capital gains tax rates
Gains of higher and additional rate taxpayers are taxed at 24%. gov.uk, CGT rates
PRC Individual Income Tax Law, arts 1, 3 and 4
A person domiciled in China, meaning habitually resident there because of household registration, family or economic ties, is a resident taxed on worldwide income (art 1). Interest, dividends and property-transfer income are taxed at 20% (art 3). Insurance compensation is exempt (art 4). chinatax.gov.cn, IIT Law
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