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Why Is There No VAT On Gold?

Tuesday, November 24, 2009

VAT is part of everyday life in the UK, but why isn't it charged on Gold?

In the UK the majority of goods and services are subject to the standardVAT  rate of 17.5% (temporarily cut to 15% between 1 December 2008 and 31 December 2009). Certain items are subject to a reduced rate of 5%, while other items such as gold are totally VAT exempt. However, this hasn’t always been the case. Prior to 1 January 2000, gold sales in the UK were taxed at the standard rate or VAT...

Unfortunately, throughout the European Union, the VAT treatment of gold varied widely. This led to distortion of competition. The UK was at a particular disadvantage since in several Member States gold was either exempt or taxed at a very low rate. Consequently, it was felt desirable to introduce a single system for the VAT treatment of gold throughout the EU. The introduction of the exemption meant that for VAT purposes, gold would be placed on the same footing as other investments, such as stocks and shares.

This exemption became law in The VAT Act 1994. The act also stated that certain gold coins should be included in the exemption. This is because a number of coins are bought not for their rarity or numismatic interest but for their value as gold bullion – and therefore, it would be inconsistent not to include them.

A list of qualifying gold coins is published by the European Commission in December each year to ensure consistency across the EU. The UK duplicates this in Notice 701/21A, alongside an additional list of gold coins accepted by the UK as qualifying for exemption.

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