Bullion coins & CGT explained

Bullion Coins & CGT Explained

Bullion can maintain special positions in the market in relation to tax regimes. Like many tax topics, this is a complicated subject, and is especially complicated because different types of precious metal products are treated differently.

What is Capital Gains Tax (CGT)?

CGT is the tax you pay on the profit you’ve made on an item when it’s sold. It differs from Income Tax in that only the gain is taxable. For example, if you bought a coin for £250 and sold it for £700, the CGT would be on the £450 you made from the sale. However, you don’t have to pay CGT if all your gains in a year are under your tax-free allowance.

Is CGT Applicable on The Royal Mint’s Coins?

All of The Royal Mint’s UK bullion coins are exempt from UK Capital Gains Tax (CGT) for UK residents only due to being legal tender. This contrasts with the vast majority of 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. Bullion bars are also subject to CGT as unlike coins, they are not legal tender.

Does the Gold Price Impact This?

Of course, someone could be selling gold bullion acquired many years earlier when the price was much lower, making it more likely that they would be exposed to CGT. This likelihood would be increased further if the sale of other assets, such as a second home or a valuable painting, had used up much or all of the exemption.

In that event, CGT would be levied at either 18 per cent or 28 per cent on gains made since 22nd June 2010, depending on the person’s taxable income. Gains made on or before 22nd June 2010 are taxed at 18 per cent.

However, it’s important to remember that should someone be liable to CGT, losses on the sale of assets can be set against gains before the final calculation is made.

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