Shojin: 45pc of UK investors don’t understand tax due on investments
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 found.
The property investment platform’s study found that 45 per cent are not aware of tax they must pay on their investments, while 40 per cent believe their investment strategy is tax efficient.
Shojin commissioned an independent survey of 777 UK adults with investment portfolios worth more than £20,000, excluding savings, pensions and their primary residency.
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The study “found a knowledge gap surrounding tax-efficient investing vehicles, with 35 per cent of investors finding it challenging to incorporate these into their investment strategies and minimise the tax burden on their portfolios.”
It said that figure rose to 53 per cent among investors aged 18-34.
The research also found that only a third (34 per cent) of investors have sought advice from a financial adviser to ensure their investments are tax-efficient.
Some 37 per cent 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 per cent more inclined to consider tax-efficient investments, the research found.
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“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,” said Shojin chief executive Jatin Ondhia.
“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.”
He added: “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.”
The market research was carried out between 13 and 17 January 2023 via an online survey by independent market research agency Opinium.
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