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, 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.
