The English centre half, who plays for Roma in Italy, says he was misinformed by his advisors.
The Sun states that Smalling met with representation from KWM Wealth Ltd at his home in 2015.
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He was advised to invest 80,000 a month in bonds, but he asked about the cost to terminate the deal.
He was informed that any such charges would be waved, but was later informed that he would face a huge tax on the investment.
Smalling fell out with former manager Jose Mourinho, who also coached him at United, earlier this season.