When buying gold as an investment, buyers naturally have one eye on a potential future sale. The intention is to make as much profit as possible, particularly during times of economic strife. At this time of high inflation, you will want to maximise your return on investment.
In this article, we will outline the Capital Gains Tax (CGT) implications of selling gold in 2022 and explain how you can buy gold Capital Gains Tax-free.
CGT is a tax that investors must pay beyond a threshold point on profit they make from certain forms of investment. When an asset increases from its purchase value in the period prior to its sale, the gain or profit may be taxable.
You can learn more about CGT at gov.uk, including the items subject to CGT, the rate of tax and tax-free allowances.
Tax implications can arise when selling precious metals. Depending on the value of your sale you may need to pay CGT on the profit you realise on investments. Unlike gold coins, many of which can be purchased tax free, CGT is due on gold bars as they are not a form of legal tender.
In contrast to VAT, which is collected at the point of purchase, CGT is charged at the point of sale. This makes it hard to predict or factor into your investment strategy.
CGT is payable on the profit that you make. Rather than being calculated based on the value of the gold when you buy or sell the gold, the amount you may owe in CGT is based on the difference between these amounts.
Remember that the burden of declaring CGT is on individual investors. If you are unsure what your tax bill should be for the coming financial year, please consult your accountant.
CGT legislation at the time of writing (June 2022) allows for a personal exemption allowance on?all profits up to £12,300. This means most smaller investors rarely need to worry about CGT. For larger investors, diversifying your portfolio with CGT-free gold means you can buy higher amounts of gold before paying tax on your profits.
Profit made above the limit is taxed at 10-28% depending on personal taxation rate tiers and the nature of the assets sold.
CGT applies to profits made over the value of the personal exemption allowance. For example, if you made a profit of £20,000 on a 20% CGT liable sale, you would owe £1540 in CGT. For many investors, a profit above the tax threshold is unlikely, however before investing in gold it’s important to consider any deductions that might be made after the point of sale.
The £12,300 tax threshold applies to all investments, so making a profit below the threshold for one item doesn’t mean you won’t eventually have to pay tax if you exceed the limit through further sales in the same financial year.
Different rates apply for individuals and businesses:
(Rates for disposal of residential property assets are generally 8% higher.)
A variety of gold coins are CGT-free, specifically British Gold Coins produced by the Royal Mint, which are considered legal tender and therefore outside the scope of CGT.
Both Gold Sovereigns and Gold Britannias have a nominal value, in addition to having a retail and investment value which fluctuates with the current price of gold.
The price of gold can be seen on our website. Below is a snapshot at the time of writing (15th June).
The most popular British gold coins include the Gold Sovereign and the Gold Britannia, both of which are internationally sought after by investors.
If you are still unsure about your liability or potential liability for CGT, particularly if you have a complex asset portfolio have a complex portfolio, it may be worth consulting your tax advisor.
Visit our British Gold Coins page to see our full list of CGT-free coins for sale. If you have any questions about buying tax-free gold, please do not hesitate to get in touch with our team, who will be more than willing to help. Our opening hours are Monday – Thursday 9am-5pm, Friday 9am-4pm.
Article Last Updated: Thursday, June 16, 2022