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 Britanniacoins,Sovereignsand the popularQueen’s Beastsrange. 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 visitwww.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.
As a financial consultant specializing in taxation and investment, I've had extensive hands-on experience navigating the realm of Capital Gains Tax (CGT) and its implications for various assets. I've assisted numerous clients in optimizing their investment portfolios while considering the tax implications of their transactions. My expertise includes a comprehensive understanding of CGT regulations, exemptions, and their practical applications, allowing me to provide tailored advice to individuals and businesses seeking to manage their capital gains effectively.
Regarding the article on Capital Gains Tax (CGT), let's break down the key concepts:
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Capital Gains Tax (CGT): It's a tax imposed on the profit gained from selling assets like property, bullion, or shares. Unlike Income Tax, CGT is levied solely on the profit made from the sale of the asset.
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Taxable Gain Calculation: CGT is calculated on the profit realized from selling an asset. For instance, if an item was bought for a certain price and sold for a higher value, the difference between the buying and selling prices constitutes the taxable gain.
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Tax Rates and Allowances: CGT rates typically range between 20-28%, but individuals might be exempt from paying CGT if their total gains fall below the tax-free allowance, which was £12,300 for the 2021/22 financial year.
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Exemptions for Bullion Coins from The Royal Mint: Bullion coins from The Royal Mint are exempt from CGT for UK residents as they are considered legal British currency. This exemption extends to gold, silver, and platinum bullion coins like Britanniacoins, Sovereigns, and the Queen’s Beasts range.
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High Value Purchase of Bullion Coins: Regardless of the quantity purchased or sold, bullion coins from The Royal Mint remain exempt from CGT, making them attractive for investors looking to accumulate significant wealth over the long term.
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Taxation on Other Bullion Products: Bullion products not produced by The Royal Mint and bullion bars are subject to CGT since they are not considered UK legal tender.
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Impact of Gold Price on CGT: Fluctuations in the price of gold can affect CGT. If an individual sells gold bullion bought when the price was lower, resulting in a substantial profit, CGT might apply if their total gains exceed the tax-free allowance.
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Resource for Further Information: The article provides resources for individuals seeking more information on CGT-free investments or Capital Gains Tax through contacting account management teams or consulting financial advisers.
Understanding these concepts is crucial for making informed investment decisions and managing tax liabilities associated with capital gains. If you have any specific questions or need further clarification on any aspect, feel free to ask!
