According to findings from Prudential, many DIY investors who self-select the majority of their investments are failing to consider important taxes and charges when making their investment decisions.

Almost half admit do not know which tax wrapper product would be most appropriate for their circumstances, while a further 37% are not sure how to avoid tax traps, and a fifth are not confident they will keep under their annual Capital Gains Tax (CGT) threshold.

Matthew Stephens, tax expert at Prudential, said: “Investing in a tax-efficient way is not something that happens automatically. Investors can save substantial amounts by maximising exemptions and limits, using ISAs and the CGT annual exemption, for example, as well as other tax-efficient investment vehicles.

“But this can be complicated and will usually be more successfully achieved with advice from a professional financial adviser.

“Investing without advice from an expert may be cheaper initially. However, without a clear understanding of all the relevant considerations, it could be very costly in the long-run.”

The findings from the report highlighted that many DIY investors are failing to fully understand the impact of how charges can eat away at investment returns, potentially losing thousands over the course of a few years.

Those who self-select are being advised that it is vital that costs/charges, risks plus tax implications are considered before applying for making a commitment to any investment.