Gold Bullion Coins & Capital Gains Tax
What is Capital Gains Tax (CGT)?
CGT is the tax you pay on the profit or gain that you’ve made on an item when it is sold. It applies to assets that you own, such as; bullion, property or shares. Capital Gains Tax differs from Income Tax in that only the gain made on the sale of the asset is taxable. For example, if you bought a coin for £250 and sold it for £700, the CGT would apply to the £450 profit you made from the sale. CGT is usually charged at a rate between 20-28%. However, you don’t have to pay CGT if your total gains within a financial year fall below the tax-free allowance of £12,300 (2021/22)*. It is the responsibility of the individual investor to declare any Capital Gains Tax payable.
Is CGT Applicable to The Royal Mint’s Coins?
Bullion coins from The Royal Mint are exempt from Capital Gains Tax for UK residents due to their status as legal British currency. In fact, all gold, silver and platinum bullion coins produced by The Royal Mint are classed as CGT-free investments; this includes gold and silver Britannia coins, Sovereigns and the popular Queen’s Beasts range. Due to their CGT exemption, investors can make an unlimited tax-free profit on all bullion coins produced by The Royal Mint. This contrasts with the vast majority of other investments and assets, including paintings, antiques, most shares and any property other than someone’s main residence, where the profits on the sale are liable for CGT.
What If I Want to Make a High Value Purchase of Bullion Coins?
Bullion coins from The Royal Mint are never subject to CGT, regardless of the amount of coins purchased or sold. For this reason, our flagship bullion coin ranges continue to prove extremely popular with investors looking to store significant levels of wealth over the long term, as well as with those individuals who seek to liquidate their investment if and when the value increases.
Are Other Bullion Products Subject to CGT?
CGT is chargeable on all gold, silver and platinum coins that are not produced by The Royal Mint as they are not considered to be UK legal tender. Also, all gold and silver bullion bars are also subject to CGT.
Does the Gold Price Impact CGT?
As the price of gold is constantly changing, gold bullion could be worth more (or less) in one financial year compared to another. For example, an individual could choose to sell a gold bullion bar that they acquired many years earlier when the price of gold was much lower, generating a significant profit. However, they would only be eligible for CGT if their total gains made within that financial year exceeded the tax-free allowance. The likelihood of this individual being subject to CGT would be increased if the sale of other assets, such as a second home or a valuable painting, had used up some of the tax-free allowance.
Of course, the price of gold has no impact on Capital Gains Tax for bullion coins from The Royal Mint as these are classed as UK legal tender and are therefore wholly exempt from CGT.
More Information
If you would like to chat about the options available in relation to CGT-free investments, please contact our account management team on 01443 623207. If you would like to find out more about Capital Gains Tax, please speak to a financial adviser or visit www.hmrc.gov.uk/cgt/
*Please note, the tax free limit of £12,300 is set for the 2021/22 financial year and is reviewed every year.
