19 November 2014

UK Capital Gains Tax Exempt Gold and Silver Investments

When you are a UK resident then there is a tax on gains from selling assets and goods, for example property, share, paintings and precious metals.

From the official Gov.uk website (Link):

Capital Gains Tax is a tax on the profit when you sell (or ‘dispose of’) something (an ‘asset’) that’s increased in value. It’s the gain you make that’s taxed, not the amount of money you receive.“

There is an annual threshold of 11,000 Pounds per year. This threshold increases slightly every year. Depending on your tax bracket you will pay somewhere between 18% and 28% tax on capital gains.

Example: 

You buy a painting for 10,000 Pounds and sell it for 20,000 Pounds:

20,000 Pounds selling price minus 10,000 Pounds buying price = 10,000 Pounds gain.

You are under the Annual Exempt Amount, so you don‘t have to pay any capital gains tax (CGT).

Gold and Silver Investors take advantage of CGT exempt products

Naturally when being confronted with unstable banks and excessive debt the investor starts to protect their assets. The current gold and silver prices are below production costs,  so the investor knows this asset will appreciate at some point.

Planning Ahead equals Saving Taxes

Depending on the overall amount being invested in gold and silver the investor diversifies into Capital Gains Exempt gold and silver products which are available to all UK investors.

The UK Capital Gains Exempt products are:

Britannia Gold Coin Series

Britannia Silver Coin Series

Full and Half Sovereign Gold Coin Series

All of the above products are minted by the Royal Mint and the UK government exempts these from Capital Gains Tax(CGT).

Higher Premium vs CGT Exemption

The following table shows an example of a regalur silver investment and a CGT exempt silver investment with an estimated gain of 50% when taking profit. The below table is just an example to explain how CGT works in the UK. We don‘t imply gold and silver will rise by 50%.

We compared two different silver products: The Vienna Philharmonic and Britannia Silver Privy Mark Horse.

Investment of 50,000 Pounds. Prices from CelticGold.eu; Euro/Pound 1.25095. Date 15th November 2014.

Investment
Price/Oz
Oz of Silver
Gain
Taxed Amount
Tax 28%

Philharmonic

     GBP 12.29

4068

       GBP 29,737

    GBP 18,737

       GBP 5,246

Britannia Privy        
Mark Horse

GBP 13.12

3811

GBP 25,000

none

none

 

 

 

 

 

 

An investment of 50,000 Pounds buys the investor 4,068 silver coins with the best priced 1oz coin offer and 3,811 coins with the CGT exempt Britannia silver coin.

The buying dis-advantage of the Capital Gains Exempt product compared to the best selling silver Philharmonic is 257 ounces or in nomimal value 3,158 Pounds.

As you get more silver the gain needs to be higher when calculating 50% gain on the original investment of 50,000 Pounds. GBP 12.29 buying price for the Philharmonic plus 50% equals 18.43 Pounds per Ounce times 257 more ounces = 4,737 Pounds.

These 4,737 Pounds is the additional gain compared to the Britannia investment.

So at first you loose 257 ounces of silver (valued currently at 3,158 Pounds) and in the end you get taxed 5,246 Pounds Capital Gains. 

Conclusion:

Because of the CGT free allowance UK investors can safely invest in the „better-value“ products such as the bestselling Philharmonics or Maple Leaf silver coins. Investments up to approx. 40,000 Pounds remain below the free allowance. One should also keep in mind that these free allowances are per fiscal year which goes from April to April in the UK. 

Investment at or above 50,000 Pounds should be made in the so called Capital Gains Exempt Products that the Britannia and Sovereign Silver and Gold coins series offer.

Author: celticgold.eu

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