Gold is considered a “tax-free” investment in the United Kingdom. This means you don’t have to pay capital gains tax (CGT) on any profits you make from buying and selling Gold. There are some exceptions to this rule, which we will discuss in more detail below.
When CGT is Applicable
There are two main situations when CGT becomes applicable to gold investments in the UK. The first is when you sell gold coins that are considered to be “collectable.” These coins are worth more than their intrinsic value because of their rarity, condition, or history. For example, some old gold coins may be considered collectable because of their age or because they were once used as currency.
The second situation when CGT may be applicable is if you use your Gold as collateral for a loan. If you default on the loan and the lender sells your gold to recoup their losses, any profits they make from the sale will be subject to CGT.
Capital Gains Tax is exempt on all British legal currency, including Gold Sovereigns and Gold Britannia coins.
How Much CGT Do I Pay?
The amount of CGT you pay depends on your income tax bracket. You can work out your Capital Gains Tax Rates here. In the UK, there are two rates of CGT: 18% and 28%. You will pay 18% CGT on your profits if you are a basic rate taxpayer. You will pay 28% CGT on your profits if you are a higher-rate taxpayer. It’s important to note that CGT is only payable on profits above the annual exempt amount, which is currently £12,300 per year. This means that if your total profits from asset sales do not exceed this amount, you will not have to pay any CGT.
It is the responsibility of the individual investor to declare any Capital Gains Tax that might be due. In most cases, you will not have to pay capital gains tax on your Gold investments in the UK.
If you are looking to purchase Gold coins and aren’t sure if you will have to pay CGT, call us, and we can advise you further.