Almost half of UK retail investors in the dark over how their investments are taxed, Shojin research reveals

New research from Shojin has revealed that almost half of retail investors in the UK do not have a good understanding of the taxes they must pay on their investments. The FCA-regulated investment platform commissioned an independent survey among 777 UK adults, all of whom 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.

What were the findings of the Shojin survey?

The Shojin study 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. It uncovered a knowledge gap surrounding tax-efficient investing vehicles, with 35% of investors finding it hard 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 over half (53%) more inclined to consider tax-efficient investments.

What were Shojin’s thoughts on these findings?

Jatin Ondhia, CEO and Co-founder Shojin
Jatin Ondhia, CEO and Co-founder Shojin

Jatin Ondhia, Chief Executive Officer and Co-Founder of Shojin said, “Taxation on investments is dominating the headlines. And our timely research has uncovered that many investors are operating with limited knowledge of how their investments – and the resultant profits – are taxed. In turn, the concept of tax-efficient investing is alien to a big portion of retail investors.”

Ondhia further expounded, “As investors continue to battle with double-digit inflation, tax efficiency must stay firmly present on their radars. Setting clear investment objectives and gaining a good understanding of the investment vehicles that can help mitigate the burden of excess taxation can go a long way in maximising potential returns on their investments.”

“Education is a key component, 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,” he concluded.