Capital Gains Tax (CGT) is a tax paid on the profit when you sell, or give away, an asset that has increased in value. It is applicable to a wide range of assets including a second home, antiques, shares, or bullion.
Every individual has an annual CGT allowance. Any gains realised in a single year will go towards your CGT allowance. Profit below the allowance limit are exempt from CGT, whilst gains over your allowance will be subject to tax in line with HMRC rates. For the 2023/24 financial year, the CGT allowance is £6,000, but it is recommended to check with HMRC or a financial adviser for current information.
Sovereigns, minted from 1837 onward, and Britannia gold coins are classed as currency. This means that, like all sterling currency, these are CGT exempt because of TCGA92/S21 (1) (b); this states that sterling is not an asset for capital gains purposes.
Please note it is the responsibility of the individual investor, and not that of Gold.co.uk, to declare any Capital Gains Tax that may be due. Here at Gold.co.uk, we make records of all transactions made for 7 years, however we do not voluntarily forward any details onto the HMRC unless specifically requested. We advise anyone unsure to get in contact with an accountant or qualified financial adviser for full legal advice.
What CGT free bullion can I buy?
Capital Gain Tax is exempt on all British legal currency. Therefore,
gold Britannia coins,
silver Britannia coins
are all CGT-free. Other coins made by The Royal Mint, such as the Tudor Beasts and Royal Arms coins are also CGT exempt. All profit realised on these investments, regardless of quantity or value, is tax-free. Although you may pay a little more for bullion coins compared to bars, if you are considering a sizeable investment then CGT is a key consideration given the potential tax saving you can make.
How to avoid paying CGT on gold?
For larger investors concerned about exceeding their annual CGT allowance, there are options available to you that minimise or avoid CGT tax. Many investors choose to invest in smaller unit gold coins or bars, this gives them the added flexibility of being able to sell parts of their bullion over more than one financial year, but only coins can also boast CGT exemption.
For example, if an investor bought £50,000 of non-UK gold coins in 2010, these coins were worth £70,000 by 2014. If the investor sold all the coins, they would have to pay tax on at least some of the £20,000 profit, as it exceeded the £10,900 CGT allowance for 2014. Instead, the investor decides to sell half the coins now and the remaining half in another financial year. This way the investor can minimise the amount of CGT they are charged on the profit released. Or by buying the UK coins mentioned above the investor could rest easy, with the peace of mind that their investment is exempt from CGT.