Retail Investors In Dark Over Taxes
Almost half of retail investors in the UK do not have a good understanding of the taxes they must pay on their investments, new research from Shojin has revealed.
The FCA-regulated investment platform commissioned an independent survey among 777 UK adults, all of which have investment portfolios worth in excess of £20,000 – this includes all forms of investments but discounts their savings, pensions and property used as a primary residency.
It found that 45% lack knowledge of the taxes they must pay on their investments. Just two out of five (40%) believe their investment strategy is tax efficient.
The study uncovered a knowledge gap surrounding tax-efficient investing vehicles, with 35% of investors finding it challenging to incorporate these into their investment strategies and minimise the tax burden on their portfolios.
The figure rose to 53% among investors aged 18-34.
Despite the lack of familiarity remaining a key barrier, only a third (34%) of investors have used the support of a financial adviser to ensure their investments are tax-efficient.
Looking ahead, 37% of respondents believe tax efficiency will play a bigger role in their investment strategies amidst rising inflation and economic slowdown.
This sentiment was stronger among investors aged 18-34, with 53% more inclined to consider tax-efficient investments.
Jatin Ondhia, CEO of Shojin, said:
“Taxation on investments is dominating the headlines. And our timely research has uncovered that many investors are operating without sufficient knowledge of how their investments – and the profits they may generate – are taxed.
In turn, the concept of tax-efficient investing is alien to a significant proportion of retail investors.
As investors continue to battle with double-digit inflation, tax efficiency must stay firmly on their radars.
Setting clear investment objectives and gaining a good understanding of the investment vehicles that can help mitigate the burden of excess tax can go a long way in maximising potential returns on investments.
Education is key, as is the support of advisers and investment providers.
The better-informed investors are about the tax implications of certain investments and profits they could generate, the more likely their strategies will achieve the desired goals.”
If you have any comments, please email the author of this article and click on the link above