In this article, we’ll explain what Capital Gains Tax is and what Bullion is Capital Gains Tax exempt.
What is Capital Gains Tax (CGT)?
Capital gains tax is a tax on the profit made when you sell an asset that has increased in value. The asset can be anything from stocks, shares and bonds to property and collectables. The tax is only payable on the profit and is calculated when the asset is sold.
When does CGT Apply?
Before worrying about the level of tax that will apply, investors first need to investigate if any CGT is due at all. If gains across all investments equates to less than the allowance (e.g. £6,000 tax year 2023/2024), you won’t have any to pay. If it’s over this, you’ll have to work out how much you need to pay.
The rate of CGT you’ll need to pay is dependant on the tax band into which the gain falls into when it’s added to other taxable income. After deducting the tax-free amount from your earnings, add the taxable gain to the figure for income earned in that tax year. If this figure is below the personal allowance band (up to £12,570), you’ll pay nothing on the gains. Within the basic rate tax band (£12,571 to £50,270), you’ll pay 10% tax on the gain and over this, you’d pay 20%.
The rate of capital gains tax for bullion investment gains could be; zero, 10%, or 20% depending on your personal financial profile. Different types of investments have varying rates of capital gains tax. For example, CGT paid on residential property is even higher (currently 18% and 28% according to the band).
It’s important that you do your own CGT research and calculations. We recommend speaking with your accountant if needs be. For up to date CGT regulations and rates you can see the UK government website here.
To calculate how much CGT investors need to pay:
- Add up the gains from all assets disposed of in that financial year.
- If you’re over the annual allowance, you may wish to apply losses from that, or, previous years to offset the gains and reduce your tax liability.
- Work out the tax rate to apply to the gain. If your income plus taxable gain is within the basic rate band, it will be the lower rate for that portion of the gain. Anything over the basic rate is payable at the higher rate.
- Add this amount to your taxable income.
What Bullion is CGT Exempt?
If you’re an investor in the UK, most gold and silver coins produced in the UK by the Royal Mint are legal UK tender and exempt from Capital Gains Tax. This means that you can make an unlimited tax-free profit on investments of any size and value on all legal UK currency coins.
This is not the case with gold and silver bars. Gold and silver bars have no denomination value, and even if purchased in the UK, are not representative of legal tender. This makes bullion bars subject to CGT, something which investors need to be aware of when declaring any payable Capital Gains Tax under HMRC’s Self Assessment.
Examples of popular CGT Exempt (in the UK) Royal Mint coins:
- Sovereign coins
- Britannia coins
- Queen’s Beasts coins
- Tudor Beasts coins
- Royal Arms coins
- Lunar series coins
- Valiant coins
- Two Dragon coins
EXAMPLE: An investor buys 2000 x silver Britannia coins for £14.52 each in March 2017, and sells them for £17.80 each in August 2023. The total taxable profit received from this would be £6560. The investor would need to pay no capital gains tax, because UK gold and silver legal tender coins are CGT exempt.
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What Bullion is subject to CGT?
All non-UK coins are not legal currency in the UK and are therefore classed as ‘chargeable assets’. This means that if investors sold them in the UK, the profit would be subject to Capital Gains Tax. If you are the resident of another country then you may be best placed to purchase coins from there. Particularly if they are ultimately to be sold in that country.
Examples of coins subject to Capital Gains Tax in the UK:
- South African Mint’s Krugerrand coins
- Royal Canadian Mint’s Maple Leaf coins
- People’s Bank of China’s Panda coins
- Austrian Mint’s Philharmoniker coins
- Perth Mint’s Kangaroo coins
- United States Mint’s Eagle coins
If you’re looking to avoid paying CGT, we’d suggest browsing our UK Gold coins and UK Silver coins.
Invest with Bleyer
Our friendly, award-winning Bleyer customer service team is always on hand to assist you. If you’d like to talk to a specialist on the phone and have a free 1-2-1 consultation, please call the office on 01769 618618. We’d love to hear from you.
