There is far more to making an investment than choosing a product and investing. Even if you get a good return on your investment, much of it can easily be lost to the taxman. It is possible to lose over 50% of your profit because of the taxes you have to pay. For this reason, tax efficient investing is important.
In the current economic climate, looking at the tax implications is even more important. This is because revenue returns on investments are relatively low, so it is even more important that you keep the bulk of your profit rather than giving it to the tax authorities.
The Ever Changing Rules
Many people are quite careful when it comes to investments, so they take professional advice. However, some investors only take that advice once particularly if they have a one off lump sum like an inheritance to invest. Taking initial advice is good, but it is important to return regularly for advice.
Over the past few years, the UK tax authorities have made changes to the rules. In fact, recently, practically every year changes have been made. These changes mean that you cannot stand still when it comes to tax efficient investments. Regular changes in the regulations mean that an investment that was tax efficient last year may not be the best option this year.
Beware of the Tax Authorities
The other reason it is important to get regular advice about your investments is to make sure that you do not owe tax that you do not know about. As we said above the regulations change on a regular basis, so an investment that was legally tax-free last year may not be this year.
he last thing you need is to inadvertently not pay the income tax you owe. As far as the HMRC is concerned ignorance of changes to the regulation is not a valid defence. Not paying the taxes you owe on your investments results in a fine as well as the need to pay the missed tax with interest. This kind of situation can easily turn a good investment that made you a profit into a terrible one that actually loses you money.
Never Miss an Opportunity
Another reason to review your investments on a regular basis with a professional is that not doing so can result in lost opportunities. Changes to finance and tax regulations are not always bad news for investors. Some changes the government makes actually give investors the chance to save more tax free or at a very low rate of tax.
Naturally, if you are not aware of these new opportunities you cannot take advantage of them. Professional investment consultants know about all of these opportunities and make sure that their clients benefit all of them.
As you can see, many benefits come from seeking investment advice on a regular basis. You just need to be careful to get advice from a true professional. That means using a well-established firm that has a good track record and a reputation for working in an ethical way.