Most goods in the UK are subject to VAT, but you may have noticed that gold is exempt. So why is VAT applied to investment silver and other precious metals, but not gold?
What is VAT?
VAT stands for Value Added Tax and is a purchase tax placed on the majority of all goods and services sold. To put it simply, VAT is when consumers pay a tax on the products they buy based on the product’s value. VAT is calculated by percentage, so the higher the price of the item, the more tax you pay. Standard rate VAT in the UK is currently charged at 20% of the net price.
How can I legally avoid having to pay VAT on my investment Silver, Platinum, Palladium or Rhodium Bars or Coins?
Bleyer can provide a solution to this by providing access to our customs warehouse storage option. Whilst your valuables are safely stored and fully insured by our custodian in this way, no VAT is payable. If you want to take advantage of this please contact our team for personal guidance as storage is best discussed and agreed in advance. Due to overheads, this option is not advised for smaller purchases or where you will want frequent access.
If you want to take physical possession of your metals, VAT will become payable at that time. If you sell back to us or to someone else holding it in storage there will be no tax to pay at any time.
Why is there no VAT on Gold?
In 1999 the European Union voted to abolish VAT on gold bullion, as gold was seen as an investment. Before 1st January 2000, gold sales in the UK were charged VAT. Whilst many other countries offered minimal VAT levels as an incentive to buy in their nation, giving them an advantage in the marketplace. Therefore, the investors of the UK and certain other countries were losing out because of this. The EU then combated this inequality by making Europe scrap VAT on investment gold to create a level playing field.
Why is there VAT on Silver?
Silver is a valuable asset due to its industrial use. Silver is treated for VAT purposes as any other ordinary commodity rather than simply as an investment. Therefore you would expect to pay VAT as it would be included in the sales price.
This is how it similarly works with other precious metals, including platinum, palladium, and rhodium.
Should I not invest in silver then?
Even though silver bullion is subject to VAT, it is not a poor investment choice. On the contrary, silver prices are seen to fluctuate more dramatically than gold, therefore, providing the opportunity to make greater profits. Due to its fluctuation, silver should be seen as a long term investment because you can hold and wait until its value has increased enough to offset the VAT you’ve paid.
Many consider the price of silver to be hugely undervalued so don’t mind paying the 20% on a low price per ounce.
Gold in comparison to silver tends to slowly and steadily rise in value. Therefore, diversifying your investment portfolio with both silver and gold allows you to gain the benefits of cashing in on silver when the market is favourable but also having the reassurance of gold.
Invest in Bullion
Our friendly Bleyer team is here to help. If you need any further help and you’d like to speak to a member of the team, please call 01769 618 618, or email us at [email protected].
