Do You Pay Capital Gains Tax on Gold Bullion?
Capital Gains Tax or CGT is a tax on the gain or profit you make when you sell anything, give away or otherwise dispose of something. It applies to assets that you own, such as bullion, shares or property. There's a tax-free allowance and some additional reliefs that may reduce your Capital Gains Tax bill. Most bullion investors will never have to pay this tax due to the size and value of their investment however it is important that investors know where they stand.
Capital Gains Tax is only payable if an investor realises over £10,100 of profit in one financial year. Be mindful that the £10,100 limit is not the total value of selling your bullion, but purely the profit made from your original outlay. For example, if an investor brought some gold bullion in 2009 for £30,000 and sold it in 2011 for £40,100, no Capital Gains Tax would be due as only the £10,100 profit made is taken into consideration. However, this single transaction would constitute the investors full tax free allowance for the year and any other profit made would be taxable at a rate between 18-28%. Please note the tax free limit of £10,100 is only set for the financial year of 2010-2011 and is reviewed every year. For the financial year of 2011/12 the tax free limit has been increased to £10,600. Click here to access the Capital Gains Tax section of the HMRC website for more information.
Please note it is the responsibility of the individual investor and not that of Bullion by Post to declare any Capital Gains Tax payable. Here at Bullion by Post we keep records of all transactions made for 7 years however we do not voluntarily forward details on to the HMRC unless specifically requested. We advise that you speak to your Accountant in further detail to ensure your personal situation is in order.
Capital Gains Tax Exempt Bullion
Are there any CGT exempt bullion products? The simple answer to this commonly asked question is yes. Capital Gains Tax is exempt on all British legal currency. This includes gold Britannia coins in all sizes, silver Britannia coins; gold Sovereigns in all sizes including Proof sets, and the one pound gold coin, two pound gold coin and five pound gold coin. Meaning, you can make an unlimited tax free profit on investments of any size and value on all these British legal currency bullion coins. CGT is payable on all other gold and silver coins which do not fall into the category and all gold and silver bullion bars are taxable.
View our full range of Capital Gains Tax Free Gold Coins
How to Avoid Paying Capital Gains Tax on Gold?
Many investors choose to invest in smaller unit gold coins or smaller gold bullion bars in order to pay no CGT, or as little CGT as possible when selling their gold bullion. This can be avoided or minimised by part selling bullion over more than one financial year. For example if an investor brought £60,000 of gold coins in 2009 which later in 2011 were worth £80,000, instead of realising the full £20,000 profit right away, the investor could sell half the coins in 2011 for a £10,000 tax free profit and sell the remaining gold coins in another financial year. However, please be aware and take into consideration the gold price is constantly changing so the remaining gold coins could be worth less (or more) within another financial year. This is a problem that is unlikely to be an issue when realising the value of silver bullion due to the substantially lower unit prices associated with silver bars and coins.
Buy CGT Free British Gold Coins
Despite British gold bullion coins attracting a slightly higher premium than Krugerrands, it is advised most UK investors buy gold sovereigns and half sovereigns for smaller units, and gold Britannia coins for larger 1 oz units. Both British gold coins are Capital Gains Tax exempt and offer the ultimate flexibility for investors.
With wealthy gold investors in mind, anyone planning on spending a substantial amount of money on gold should look no further than sovereigns and the gold Britannia coin. To help highlight the potential benefits of buying British gold coins, a gold investment of £50,000 in September 2007 would be worth over £150,000 in November 2011. If this gold investment was made in any way other than British gold coins the gain would be liable to Capital Gains Tax. Therefore the tax saving to a CGT paying individual looking to realise this investment would be up to £28,000. Obviously if the gold price continued to increase and the investor chose to hold on to their gold the tax savings could be even greater.
If you have any further questions regarding Capital Gains Tax please speak to your Accountant or click the following link to visit the CGT section of the HMRC website: http://www.hmrc.gov.uk/cgt/
If you have any questions please feel free to contact our knowledgeable and friendly sales team on 0121 554 9914 who will be happy to talk your through any queries you may have. Alternatively, you can e-mail us on: firstname.lastname@example.org and we will get back to you as soon as possible.