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.

Thus in order to have to pay CGT on the sale of our coins, a British or UK resident buyer subject to British taxes would need to have made more than the annual exemption limit in profit on the sale of their assets during one year.

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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Our UK bullion coins, including The Sovereign, Britannia, Lunar and Queen’s Beasts, are exempt from UK Capital Gains Tax (CGT) for UK residents only due to being legal tender.

CGT is a tax levied in the UK on the profit made on the disposal of assets. It differs from Income Tax in that only the gain is taxable. The cost of acquiring the asset is deducted from any calculation, as is the annual exemption limit.

For information on the current annual exemption limit, please visit.

This contrasts with the majority of assets, the profits on the sale of which are liable for CGT. These include paintings, antiques, most shares and any property other than someone’s main residence.

Thus in order to have to pay CGT on the sale of precious metals, a British or UK resident buyer subject to British taxes would need to have made more profit than the annual exemption limit on the sale of their assets during one year.

 

Gold price

Of course, someone could be selling 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 June 22, 2010, depending on the person’s taxable income. Gains made on or before June 22, 2010, are taxed at 18 per cent.

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Capital Gains Tax exempt gold, silver & platinum coins

The good news for bullion buyers is that legal tender is exempt from CGT in the UK, meaning that coins such as The Sovereign, Britannia, Lunar and Queen’s Beasts do not attract the tax in the UK. This exemption applies regardless of the profit made on the purchase and sale of bullion coins in any quantity and over any time period. Royal Mint Bullion also offers international bullion coins such as the Canadian Maple and the Krugerrand. Because these coins are not legal tender in the UK – they are not CGT exempt.

A selection of our bullion coins available are:

The Sovereign

The Sovereign, The Royal Mint’s flagship gold coin, is struck in 22-carat gold and is one of the world’s greatest gold coins, tightly specified, accurate and one of the most trusted for more than 500 years. As they are legal tender, British gold Sovereigns are not subject to Capital Gains Tax (CGT).

Britannia

Since it was launched in 1987, the Britannia coin, with the legendary figure of Britannia, has symbolised Britain’s strength and integrity. Today, our Britannia gold and silver coins are struck in 999.9 fine gold and 999 fine silver. The famous 1oz Britannia has a face value of £100 and is also available in half ounce, quarter-ounce and tenth-ounce coins which have denomination values of £50, £25 and £10 respectively and are not subject to Capital Gains Tax (CGT).

Lunar

The Lunar range was first released in 2014 marking the Lunar Year of the Horse. It was the first in a series of twelve following the lunar calendar and artist Wuon-Gean Ho and was later followed by the Lunar Year of the Sheep, The Monkey and The Rooster. These bullion coins contain one ounce of fine gold or silver and are not subject to Capital Gains Tax (CGT).

The Queen’s Beasts

The Queen’s Beasts range of bullion coins is the latest addition to the Royal Mint bullion range. As well as being available in both 1 oz and 1/4 oz gold, a 2 oz silver version is also included in the range. When the first in the Queen’s Beasts series, The Lion, was released, it marked the first time in which an official 2 oz United Kingdom silver bullion coin had been struck. As they are legal tender, the Queen’s Beasts coins are also not liable to Capital Gains Tax (CGT).

Other UK bullion coins such as The Two Dragons, The Royal Arms and The Landmarks of Britain series are also CGT exempt.

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

 

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